Note 7 - Leases

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Lessee, Operating and Financing Leases [Text Block]

Note

7.

Leases

Operating Leases

Avalon leases golf carts, machinery and equipment for the landfill operations, furniture and fixtures for The Grand Resort and office copiers under operating leases. On

January 1, 2019,

as a result of the adopted ASU

2016

-

02,

the Company recorded a ROU asset and related lease liability of approximately

$1.7

million. Our operating leases have remaining lease terms ranging from

1

to

5

years. The weighted average remaining lease term on operating leases was approximately

3.7

years at

December 31, 2020.

In connection with the purchase of New Castle Country Club's real property assets on

May 13, 2019,

the Company assumed the remaining term of New Castle Country Club's golf cart operating lease. At acquisition, the Company recorded an operating lease right-of-use asset and corresponding obligation under operating leases of approximately

$126,000.

The golf cart operating lease had a remaining lease term of

3

years at the acquisition date (See Note

18

). In addition, subsequent to the purchase, the Company also entered into new operating lease agreements for additional golf and maintenance carts. The Company recorded an operating lease right-of-use asset and corresponding obligation under operating leases of approximately

$194,000.

During the

2020,

the Company entered into new operating lease agreements for hotel furniture and golf carts. The Company recorded operating lease right-of-use assets and corresponding obligation under the operating leases of approximately

$0.9

million.

Leased property and associated obligations under operating leases at

December 31, 2020

and

2019

consists of the following (in thousands):

	2020		2019
Operating lease right-of-use assets	$	1,728	$	1,466
Current portion of obligations under operating leases	$	529	$	513
Long-term portion of obligations under operating leases		1,199		953
Total obligations under operating leases	$	1,728	$	1,466

The weighted average discount rate on operating leases was

4.7%

at

December 31, 2020

and

5.0%

at

December 31, 2019.

Finance Leases

In

November 2003,

Avalon entered into a long-term agreement with Squaw Creek Country Club to lease and operate its golf course and related facilities. The lease has an initial term of

ten

(

10

) years with

four

(

4

) consecutive

ten

(

10

) year renewal term options unilaterally exercisable by Avalon. Under the lease, Avalon is obligated to pay

$15,000

in annual rent and make leasehold improvements of

$150,000

per year. Amounts expended by Avalon for leasehold improvements during a given year in excess of

$150,000

will be carried forward and applied to future leasehold improvement obligations. Based upon the amount of leasehold improvements already made, Avalon expects to exercise all its remaining renewal options. At

December 31, 2020

there were approximately

32.8

years remaining on the golf course and related facilities finance lease.

In addition, the golf and related operations also entered into lease agreements for vehicles, golf course maintenance and restaurant equipment and the captive landfill operations entered into lease agreements for equipment which were determined to be finance leases. At

December 31, 2020,

the vehicles, golf course maintenance and restaurant equipment and the landfill operations equipment have remaining lease terms ranging from

1

to

5

years. The weighted average remaining lease term on the vehicles and equipment leases was approximately

3.0

years at

December 31, 2020.

Leased property and associated obligations under finance leases at

December 31, 2020

and

2019

consists of the following (in thousands):

	2020			2019
Leased property under finance leases	$	12,112		$	11,758
Less accumulated amortization		(6,377	)		(5,880	)
Leased property under finace leases, net	$	5,735		$	5,878
Current portion of obligations under finance leases	$	333		$	295
Long-term portion of obligations under finance leases		560			555
Total obligations under finance leases	$	893		$	850

The weighted average discount rate on finance leases was

4.5%

at

December 31, 2020

and

5.2%

at

December 31, 2019.

For the years ended

December 31, 2020

and

2019,

components of lease expense were as follows (in thousands):

	2020		2019
Operating lease cost:
Rental expense	$	643	$	775
Finance lease cost:
Depreciation expense	$	497	$	506
Interest expense		40		43
Total finance lease cost	$	537	$	549

Future commitments under long-term, operating and finance leases at

December 31, 2020

are as follows (in thousands):

	Finance		Operating		Total
2021	$	372	$	598	$	970
2022		174		548		722
2023		116		380		496
2024		105		204		309
2025		41		153		194
Thereafter		405		-		405
Total lease payments		1,213		1,883		3,096
Less imputed interest		320		155		475
Total		893		1,728		2,621
Less: current portion of obligations under leases		333		529		862
Long-term portion of obligations under leases	$	560	$	1,199	$	1,759

Future commitments under long-term, operating and finance leases at

December 31, 2019

are as follows (in thousands):

	Finance		Operating		Total
2020	$	332	$	575	$	907
2021		285		513		798
2022		87		323		410
2023		29		154		183
2024		18		27		45
Thereafter		420		-		420
Total lease payments		1,171		1,592		2,763
Less imputed interest		321		126		447
Total		850		1,466		2,316
Less: current portion of obligations under leases		295		513		808
Long-term portion of obligations under leases	$	555	$	953	$	1,508