Evansville apartment complex could face millions in fines due to safety violations

EVANSVILLE — A local apartment complex could face more than $2 million in fines from the state stemming from previous safety violations with its natural gas service.

The Indiana Utility Regulatory Commission opened an investigation into Coldwater Flats, located at 1320 Lee Court, June 5, as a result of probable violations found in 2021. The complex is managed by Towne Properties, which is also named in the investigation.

CenterPoint is listed as an intervenor in the case as it provides the complex with its natural gas service.

According to the IURC, the complex appeared to came into compliance with the applicable pipeline safety standards in October 2021 and remains so now. The goal of the investigation is to determine which entity was responsible for compliance, if violations were committed and what the fines will be.

The attorney for the apartment complex did not respond to a request for comment from the Courier & Press.

What violations is the state alleging?

June 21, 2021, the pipeline safety division of the IURC inspect the system at Coldwater Flats and found violations, according to a filing in this issue.

After that inspection, the division found the complex was not operating its gas system with qualified workers who could respond to gas odor calls. As an operator of this natural gas system, Coldwater Flats should have employees who are qualified to perform tasks like inspections, according to the state. There should also be employees who can respond when a tenant believes they smell a gas leak.

The IURC reached out to CenterPoint and it was arranged that the utility would respond to gas odor calls on behalf of the complex until a qualified employee was on staff.

Notices of probable violations were sent on July 8, 2021, for

• Four violations for failure to file or keep various master meter records and for failing to maintain an operations and maintenance plan

• Two of violations failure to maintain records and qualified individuals to perform certain tasks

• Two violations for failure to maintain various records, including an emergency plan

No responses were sent back in the required time frame.

As a follow up, the IURC sent the notices again in September 2021 with a proposed penalty of $25,000 for each of the eight violations.

According to the state, Coldwater Flats, managed by Towne Properties, responded in October 2021 accepting the findings, but asked that all penalties be waived due to a new agreement with a third party company, Utility Safety and Design, Inc., for compliance oversight.

The notices were sent again in July 2022, "to ensure that adequate notice was provided," to all entities potentially connected to the complex.

On Aug. 31, 2022, a response came from Coldwater Flats LLC, Coldwater Flats IN LLC, Town Properties Asset Management Company and Towne Properties Asset Management Company, LTD., LLC. It contested the violations and asked the investigation be closed.

On Jan. 30, 2023, the notices were also sent to an additional entity, Arbors Evansville, LLC.

March 9, 2023, the previous respondents and the Arbors Evansville, LLC, sent a new responds again contesting the violations and asking the investigation be closed.

At this point, the division of pipeline safety decided another violation that had not previously been cited should be sent.

"Arbors Evansville, LLC, had failed to register the operator of the master meter system during the entirety of its ownership spanning approximately four years," the IURC states in its filing. "This failure created the lack of clarity surrounding the identity of the gas operator in this matter."

March 28, 2023, a new notice was sent to the Arbors Evansville, LLC, with a violation for failing to properly register the name of the gas operator.

The response from the LLC on April 7, 2023, stated it did not know the registration was not updated.

As it stands, all violations were consolidated into one notice of nine violations at $25,000 each. This would make the penalty proposed $225,000.

"If the per day penalty is assessed on only two of the nine violations, then the maximum total penalty allowed by thestatute is $2,175,000," the filing states.

Who owns Coldwater Flats?

A part of the investigation focuses on which of six possible operators of the system was responsible for compliance:

• Towne Properties Asset Management Company

• Towne Properties Asset Management Company, an Ohio corporation doing business inthe State of Indiana under the alternate name TPAMC Inc

• Towne Properties Asset Management Company, LTD., an Ohio corporation doing business in the State of Indiana under the alternate name Towne Properties Asset Management Company, LTD., LLC

• Arbors Evansville, LLC

• Coldwater Flats LLC, a Delaware limited liability company doing business in the State of Indiana under the alternate name Coldwater Flats IN LLC

• Coldwater Flats LLC.

The state found that during most of the applicable time the complex was owned by Arbors Evansville, LLC.

During its ownership, 2019-2022, it used an unregistered business name "Coldwater Flats" for its gas operations at the apartments.

"The master meter system operator is also required to register with the Pipeline and Hazardous Materials Safety Administration (PHMSA) and to obtain and maintain an operator identification number," according to the IURC.

When it sold the complex in 2022, Coldwater Flats, LLC, took over. The IURC states the new owners continued using the unregistered name of "Coldwater Flats."

The on-site property manager has been Towne Properties Asset Management Company. The state believes it negotiated with a third-party, Utility Safety and Design, Inc. on pipeline compliance activities for the natural gas system.

What's the timeline for the case?

The state will need to file all of its testimony and exhibits by Oct. 23. The apartment complex, intervenors and the Office of Utility Consumer Counselor will file testimony and exhibits by Dec. 21.

Rebuttal from the state will be due by Jan. 15, 2024.

The evidentiary hearing is set for 9 a.m. EST April 15, 2024, in Indianapolis if the matter isn't settled before then.

This article originally appeared on Evansville Courier & Press: State investigating Evansville apartment complex for safety violations