By Heather Clower
The Parsons Advocate
Fred and Tracy Herz, part owners and operators of Timberline Four Seasons Utilities (TFSU), have found themselves amidst nearly two dozen civil cases resulting in proceedings beginning in May of 2018. This is when the first petitions to the Public Service Commission were received to request a general investigation of Timberline Four Seasons Utilities and a general investigation commenced.
TFSU was placed on an improvement plan during this investigational period where a number of red flags began to appear. Not only did they not comply with the improvement plan provisions, they accrued even more debt and continued making monetary transfers and distributing assets to affiliates in excess of earnings, as well as having unpaid state and federal taxes for an estimated total of nearly $65,000.
Several complaints started pouring in the second part of May alleging TFSU was no longer paying their employees and payments/checks made to workers and vendors have bounced due to insufficient funds. The allegations continued, stating that the water system was not properly maintained, offices had been closed during business hours, supposed water leakages, certified operator was terminating employment for non-payment, and questionable minimum usage charges to homeowners yet providing inadequate services.
On June 4, Canaan Valley Public Service District (CVPSD) filed a petition to intervene, stating that TFSU was not properly maintaining their water flow which resulted in an abundance of flow into CVPSD, who treats the waste water from TFSU. This creates several adversaries and operational cost increase for CVPSD and is out of compliance of normal operation. There is an agreement between these two facilities that states TFSU is to pay CVPSD around $27,000 per month for their services, which in turn compromises a large portion of their income. The April payment for services was not received on time due to insufficient funds, which resulted in the addition of a late fee, which happened again in May.
Additional complaints were filed the month of July of 2018 again expressing concern of locked business offices and unanswered phones, employees no longer working due to non-payment, interruption in water services, improper billing, and failure to maintain and repair equipment.
On August 6, CVPSD reported continued missed payments by TFSU and claimed at that time were currently in default in excess of $67,000. Eleven days later, the Public Service Commission engaged in an investigation and reported their findings to include the following: “it continued to see unusual transactions in the financial information TFSU was providing. Staff could not reach TFSU during normal operating hours. Staff reported that there was a worsening financial situation for TFSU and that TFSU continued to make frequent improper transfers of revenue to its affiliates in excess of the management fee. Since May 1, 2018, Staff reported that TFSU transferred more than $170,000 to affiliates. It further reported that TFSU’s affiliates defaulted on existing payment plans to pay for arrearages on utility services. TFSU’s affiliates have also not paid their current bills for water and sewer services. Staff also reported an inflow of $97,520 from what appeared to be a third party lender. Staff expressed concerns that it was an unusual transaction, which may have improperly encumbered TFSU property to benefit affiliates.”
This resulted in a hearing to be scheduled for December 13 to discuss the possibility of putting TFSU into receivership, which is defined as a process in which a legally appointed receiver acts as custodian of a company’s assets or business operations. TFSU argued this point claiming to provide clean water and sewage services to their customers. The PSC responded stating the concerns still remain for several reasons, including the fact their unaccounted for water loss was measured at 50.7% and bills remained unpaid.
On October 17, CVPSD submitted a request for emergency interim relief. According to Prosecuting Attorney Ray LaMora, “it means it is a temporary measure to ensure that the public who is under the utilities coverage is protected by this order”. This request was in lieu of payments owed by TFSU to CVPSD in excess of $100,000 and the largest of their five customers. A hearing was then held on October 30 in which Fred Herz was required to attend. Representatives from the Commission, CVPSD, and TFSU were present, though it does not mention whether Herz complied and appeared. It was agreed upon to provide interim relief for CVPSD to allow them to make periodic withdrawls from certain TFSU bank accounts, required TFSU to secure a certified operator, and to secure proper funds to pay the operator. The following day, the Health Department issued a boil water notice to those serviced by Timberline as a precautionary measure due to the lack of a certified operator.
Following this notice, comments and complaints were filed stating the difficulties it presented to book rental units as well as the negative impact on the economy it would present. Concerns continued about illegitimate money transfers, inconsistencies of bills, and lack of access to assistance during business hours. In regards to the realty companies affected by the boil water notice, it was stated the realtors were losing around $27,300 daily. Homeowners organization Timberline Association, Inc. (TAI), were amongst the concerned to come in with a list of negative impacts the boil water notice has presented.
The PSC requested on November 30 that TFSU be put into receivership and listed nearly a dozen reasons backing their suggestion. The document reads, “On December 7, 2018 TFSU confessed that for all purposes, that it was guilty of “gross negligence justifying placing the utility into the hands of a receiver.” TFSU stipulated that “the Commission may place the utility in the hands of a receiver upon condition that the receiver is required to report to the Court on the condition of the utility every six months.” TFSU indicated that Fred Herz and all other officers would invoke the Fifth Amendment right not to incriminate themselves regarding all questions except their names and addresses. TFSU requested that the hearing be canceled or rescheduled”. Staff of the PSC objected to this request which was then denied
The hearing took place as scheduled on December 13, 2018 where TFSU announced Fred Herz had resigned from the board and his wife Tracy would act in his place. This produced the argument that the board was now under new management. Evidence was presented as well as comments from several of those from the audience in attendances that have been affected by this ordeal.
At the end of this forty-three page document, the orders were as follows: “that an Order from the Circuit Court of Tucker County be sought as soon as possible placing Timberline Four Seasons Utilities, Inc., into receivership with the receiver being Canaan Valley Public Service District”.
As of current, Timberline Four Seasons Utilities is still under its own management but are on strict timelines to provide responses back and forth with the Public Service Commission. However, Fred Herz was also scheduled to appear on a personal matter in magistrate court on Friday, February 8 to discuss his non-payment of hotel/motel tax with the exception of once out of the last thirteen months. No agreement could be reached at that time and a trial date will be set.
In addition to the former mentioned issues within the businesses of Timberline, The Parsons Advocate is closely monitoring the development of the papers served last week for Writ of Possession against Timberline Four Seasons Resort Management Company Inc., Timberline Four Seasons Resort, Long Run Realty Inc., Timberline Four Seasons Realty, Frederick Stephan Herz, Rose Marie Herz, Frederick Reichle, and FHFR LLC. No contact has been made to these defendants or the plaintiff and/or plaintiff’s attorney, Robert L. Bandy, Kay Casto & Chaney PLLC. Please follow up next week as this story evolves.