12. Commitments and Contingencies

Leases

In the accompanying consolidated balance sheets, the following amounts of assets under capitalized lease agreements are included as shown and the related obligations are included in debt (amounts in thousands):


	2017			2016
Property and equipment	$	3,636		$	3,636
Prepaid expenses and other assets		130			130
Accumulated depreciation		(2,717	)		(2,429	)

Net assets under capital leases	$	1,049		$	1,337

Rental expense for operating leases was $12.5 million, $12.4 million, and $12.3 million for 2017, 2016 and 2015, respectively.

The Company entered into a 75-year operating lease agreement during 1999 for 65.3 acres of land located in Osceola County, Florida for the development of Gaylord Palms. The lease requires the Company to make annual base lease payments, which were approximately $4.1 million in 2017. The lease agreement provides for an annual 3% escalation of base rent. The terms of this lease require that the Company recognize lease expense on a straight-line basis, which resulted in an annual base lease expense of approximately $9.4 million for 2017, 2016, and 2015. This rent included approximately $5.1 million, $5.2 million, and $5.4 million of non-cash expenses during 2017, 2016, and 2015, respectively. At the end of the 75-year lease term, the Company may extend the operating lease to January 31, 2101, at which point the buildings and fixtures will be transferred to the lessor. The Company also records contingent rental expense based upon net revenues associated with the Gaylord Palms operations. The Company recorded $2.2 million, $2.2 million, and $2.0 million of contingent rental expense related to the Gaylord Palms in 2017, 2016, and 2015, respectively.

Future minimum cash lease commitments under all non-cancelable leases in effect at December 31, 2017 are as follows (amounts in thousands):


	Capital Leases			Operating Leases
2018	$	46		$	4,597
2019		46			4,732
2020		46			4,867
2021		46			5,009
2022		46			5,153
Years thereafter		704			590,989

Total minimum lease payments		934		$	615,347

Less amount representing interest		(295	)

Total present value of minimum payments	$	639

Other Commitments and Contingencies

The Company is self-insured up to a stop loss for certain losses relating to workers’ compensation claims and general liability claims through September 30, 2012, and for certain losses related to employee medical benefits through December 31, 2012. The Company’s insurance program has subsequently transitioned to a low or no deductible program. The Company has purchased stop-loss coverage in order to limit its exposure to any significant levels of claims relating to workers’ compensation, employee medical benefits and general liability for which it is self-insured.

The Company has entered into employment agreements with certain officers, which provides for severance payments upon certain events, including after a change of control.

The Company, in the ordinary course of business, is involved in certain legal actions and claims on a variety of other matters. It is the opinion of management that such legal actions will not have a material effect on the results of operations, financial condition or liquidity of the Company.