Utah regulators seek to revoke license of Utah-based Legend Solar as company shows signs of an ‘extreme cashflow problem’ and customers are left hanging

(Francisco Kjolseth | The Salt Lake Tribune) Doug McAllister of South Jordan bought a solar panel array from Legend Solar last September. In December, Legend Solar started putting the panels but never finished. McAllister owes more than $12,000 on a loan he took out to finance the panels. The company has indicated to him that they are unable to hire an electrician to finish the job and the array sits idle on his roof, two panels short and unconnected.

Once a rising star in Utah’s booming solar industry, Legend Solar appears to be showing signs of financial strain, potentially leaving scores of customers — and employees — in limbo.

In just one year, annual sales for the St. George-area firm fell from a 2016 peak of $32 million down to an estimated $12 million in 2017. That precipitous decline brought layoffs and what one company blog post in January called its “extreme cashflow problem” that has prevented Legend Solar from completing installations for clients in Utah, Nevada and Oregon.

Would-be customers, such as South Jordan resident Douglas McAllister, say they have already paid for — or taken out loans to cover — at least part of the costs of their unfinished residential and commercial arrays.

The company’s latest story, McAllister said, blamed the delays on difficulties hiring installers. “I suspect it is because they can’t pay them,” he said.

Former company employees say that after months of high spending on executive salaries and perks, they doubt Legend Solar has enough cash to cover what the company may owe customers and creditors.

State regulators, meanwhile, have filed documents seeking to revoke the company’s license to operate as a contractor in Utah.

But top executives insist that Legend will recover and make good on outstanding contracts or provide refunds. Bankruptcy, they say, is not an option.

“We are committed to taking care of our customers and being the best version of ourselves that we’ve ever been, going forward,“ Shaun Alldredge, co-founder and owner of Legend Solar, said.

Alldredge acknowledged the company hit some financial trouble, but attributed most of its woes to market uncertainty created in 2016-17 by Rocky Mountain Power, Utah’s largest electricity provider, and its threat to end solar incentives for customers.

Utah’s solar industry experienced a surge of sales during that time period. Data from Rocky Mountain Power suggest its proposal to change billing for customers with rooftop solar arrays spurred more than 10,000 Utahns to invest in panels in 2017 alone.

Unsettled markets

Founded in 2012, Legend Solar was among the firms that helped negotiate a settlement with Rocky Mountain Power involving the utility’s net metering program, which pays solar customers for surplus power they generate. The settlement yielded a 2017 deadline for qualifying for those solar paybacks, leading to a flurry of orders for residential arrays.

Yet Legend Solar feared the deal could fall through, Alldredge said, so its sales force refused to promise customers they would be grandfathered into Rocky Mountain Power’s program — and did not use the deadline as a marketing tool.

That, Alldredge said, brought what was effectively a 10-month freeze on Legend Solar’s sales.

Adam Parr, the company’s former vice president of finances, agreed that slowdown in 2017 triggered the company’s woes, but he claimed prior decisions by executives primed Legend Solar for financial trouble.

The company’s business model typically called on customers to put a down payment to cover about half the cost of materials, leaving Legend Solar to take out loans to buy solar panels and other equipment. That, Parr said, made Legend Solar increasingly dependent on credit when sales began to dwindle.

As Legend fell into debt, Parr said it sometimes opted to pay its employees’ salaries — some of which he said topped $500,000 yearly — before purchasing materials or paying down loans. The firm also had a large marketing budget, he said, and executives and sales staff took trips to Mexico and other exotic locations at the company’s expense.

Alldrege and Legend Solar co-owner Shane Perkins said company compensation was high due to its system of sales commissions, and that some of those employees were eventually put on salaries instead. They refuted Parr’s allegations about the marketing budget, but said the vacations for sales staff continued into 2017, even as the company hit financial difficulty. Those trips, they said, were already promised and paid for.

But Parr said the company began losing money as early as 2015, due in part to executives’ spending. When he urged top managers to cut those costs, he said, they fired him.

Perkins disputed Parr’s accounts of financial losses as early as 2015. The company co-founder also said that Parr was instead let go for incorrectly telling the company’s suppliers that Legend Solar was struggling to pay its debts.

Parr said when he left in 2017, Legend Solar already owed money to suppliers and was obligated to roughly 130-140 customers with unfinished installs.

Difficult days

After Parr’s departure, conditions at Legend worsened, according to accounts from former workers. Several employees who stayed through waves of layoffs in late 2017 and early 2018 said it struggled to make payroll last November and December.

Many claimed they are still owed money for work performed, including one former salesman, Brian Cooper, who according to court documents has sued the company for more than $300,000 in commissions. Perkins said Legend Solar disputes Cooper’s claims.

Some former employees interviewed by The Salt Lake Tribune sought to remain anonymous, fearing they might be unable to reclaim unpaid wages if they spoke out publicly.

Perkins and Alldredge said that because Legend had laid off its in-house installers, it struggled to find workers to finish pending projects.

McAllister said a Legend crew began installing a 20-panel array on his South Jordan home in mid-December. After fastening 18 panels to the roof, they left — with the remaining two panels and electrical work incomplete.

Jayson Johns, Legend Solar’s director of customer service until he left in January, said he was told to call customers and request they pay the entire cost of their installations up front — with a promise they would get their panels installed within a month.

The tactic worked at first, Johns said, but executives used the money raised to issue paychecks in December. At that point, Johns said, he laid off the remaining customer service staff and resigned.

“I would no longer make phone calls to people and request money with the guarantee that we would put it toward their project,” Johns said. “They had proven the owners weren’t disciplined enough to see that through.”

Alldredge said Johns told company managers he was leaving to pursue other opportunities.

Perkins acknowledged that some clients who were urged to pay in full still don’t have operational solar panels, but he disagreed with the claim they were promised completion within a month.

Some Legend customers, meanwhile, say they’re facing more serious problems than unfinished arrays.

Outstanding loans

Dana Fillingim, who lives in the St. George area, said she has technically paid Legend Solar more than $50,000 for a panel installation, even though, to her knowledge, she had never given permission for funds to be transferred.

Fillingim said a sales representative from Legend Solar helped her obtain financing from a lender called Green Sky on Oct. 21, 2017. On Oct. 23, she said, $17,000 was withdrawn from the account. On Dec. 11, the remaining $35,000 was withdrawn.

She has been unable to reach Green Sky, she said, to find out why the money was transferred without her approval — or even to get basic documentation from Green Sky, including loan statements. She said she has made $1,570 in loan payments already.

“I don’t want our credit ruined,” Fillingim said. “We’re in our later 50s, and we worked our entire lives to establish good credit.”

McAllister, who also took out a loan with Green Sky, said the entire $12,500 amount was withdrawn from the account the day after he signed his Sept. 25 contract with Legend Solar.

Legend Solar’s owners said they never authorized taking funds from customers’ loan accounts without permission.

Green Sky, with headquarters in Atlanta, has terminated its relationship with Legend Solar, said Gerald Benjamin, the lending company’s vice chairman. Accounts of customers with loans to pay Legend Solar will be put on hold until a solution to make them whole can be worked out, he said.

“We take this incredibly seriously,” Benjamin said. “We will not allow merchants to abuse borrowers.”

A second lender, Salt Lake City-based EnerBank, also indicated it will no longer issue loans for Legend Solar projects, though a company spokesman would not explain what prompted that move.

Perkins and Alldredge said their plan for bringing Legend back to financial health includes steps to restore its business relationships with Green Sky and EnerBank.

‘Things we don’t know’

On Tuesday, the state Division of Occupational and Professional Licensing issued an order recommending the revocation of licenses held by Legend Electric, which according to the complaint also operated under the names Legend Solar, Legend Energy and Legend Ventures.

State officials say that an investigation has revealed the company violated state law and “misrepresented” its situation on a recent application to renew its Utah licenses to operate as a contractor. The probe found 15 outstanding tax liens, documents said, that Legend did not disclose on its November 2017 renewal application.

A spokesperson for the Utah Attorney General confirmed the office has also received complaints regarding the St. George-area company, but could not say whether state lawyers will investigate.

Legend’s main solar panel supplier, California-based SunPower, now refuses to sell to Legend Solar. In a statement, SunPower said only that it expected its affiliates to show honesty in their business dealings. The company owners said they don’t know why SunPower has cut them off.

Yet in spite of these obstacles, Alldredge and Perkins said they intend to rebuild the business. They said they have launched a sister company, Legend Energy, focused on helping customers reduce their energy consumption.

Both executives acknowledged they are unsure how Legend Solar is going to find a new supplier for high-quality solar panels.

“There are things we don’t know yet,” Alldredge said.

He said he views the past year as a learning experience that will make Legend Solar a better company. The goal now, Alldredge said, is to clear up the installation backlog — which Perkins estimated at arrays for 50 to 60 customers — within three months. They also said they plan to pay back what they owe to current and former Legend employees, aiming to be debt-free by year’s end.

“Right now,” Alldredge said, “the only thing that matters is how we handle today, tomorrow, the next day.”

— Tribune reporter Mariah Noble contributed to this story.