Disclosures About Fair Value (Tables)

3 Months Ended

Mar. 31, 2016

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following tables set forth the Company’s assets and liabilities that were measured at fair value, on a recurring basis, by level within the fair value hierarchy. There were no significant transfers between Level 1 and Level 2 during the three months ended March 31, 2016 or during the year ended December 31, 2015.

At March 31, 2016 (in thousands):



	Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at March 31, 2016
Assets
Available-for-sale equity securities⁽¹⁾	$	9,399	$	9,134			$	18,533
Available-for-sale debt securities⁽¹⁾	4,409						4,409
Total	$	13,808	$	9,134			$	22,942
Liabilities
Contingent Consideration ⁽²⁾					$	2,715	$	2,715

At December 31, 2015 (in thousands):



	Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2015
Assets
Available-for-sale equity securities ⁽¹⁾	$	10,685	$	7,452			$	18,137
Available-for-sale debt securities⁽¹⁾	4,453						4,453
Total	$	15,138	$	7,452			$	22,590
Liabilities
Contingent Consideration ⁽²⁾					$	2,707	$	2,707

⁽¹⁾ Where there are quoted market prices that are readily available in an active market, securities are classified as Level 1 of the valuation hierarchy. Level 1 available-for-sale investments are valued using quoted market prices multiplied by the number of shares owned and debt securities are valued using a market quote in an active market. All Level 2 available-for-sale securities are one class because they all contain similar risks and are valued using market prices and include securities where the markets are not active, that is where there are few transactions, or the prices are not current or the prices vary considerably over time. Inputs include directly or indirectly observable inputs such as quoted prices. Level 3 available-for-sale securities would include securities where valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

⁽²⁾ Included in this caption is the contingent consideration that the Company entered into as part of the acquisition of Citizens Homes, Inc. (“Citizens”). The contingent consideration arrangement requires the Company to pay up to a maximum of $6 million of additional consideration based upon achievement of various pre-tax net income performance milestones of the new business (“performance milestones”) over a five year period commencing on April 1, 2014. Payout calculations are made based on calendar year performance, except for the sixth payout calculation, which will be calculated based on the achievement of performance milestones from January 1, 2019 through March 25, 2019. Payouts are to be made on an annual basis. The potential undiscounted amount of all future payments that the Company could be required to make under the contingent consideration arrangement is between zero and $6 million. The estimated fair value of the contingent consideration was estimated based on applying the income approach and a weighted probability of achievement of the performance milestones. The estimated fair value of the contingent consideration was calculated by using a Monte Carlo simulation model. The fair value of the contingent consideration was then estimated as the arithmetic average of all simulation paths. The model was based on forecast adjusted net income over the contingent consideration period. The measurement is based on significant inputs that are not observable in the market, which are defined as Level 3 inputs. Key assumptions include: (1) forecasted adjusted net income over the contingent consideration period, (2) risk-adjusted discount rate reflecting the risk inherent in the forecasted adjusted net income, (3) risk-free interest rates, (4) volatility of adjusted net income, and (5) credit spreads. The risk adjusted discount rate for adjusted net income was 12.7% plus the applicable risk-free rate resulting in a combined discount rate ranging from 12.7% to 13.2% over the contingent consideration period. The volatility rate of 18.6% and a credit spread of 11.0% were applied to forecast adjusted net income over the contingent consideration period.

Fair Value Measurements on a Non-Recurring Basis

The following tables set forth the Company’s non-financial assets that were measured at fair value on a non-recurring basis for the year ended December 31, 2015, by level within the fair value hierarchy. There were no such measurements for the three months ended March 31, 2016.

Year Ended December 31, 2015 (in thousands):



Asset Description	Quoted Prices In Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Total Loss
Intangible water assets⁽¹⁾			$	3,023	$	269
Oil and gas wells ⁽²⁾			$	2,542	$	1,816
Real estate and development costs ⁽³⁾			$	3,400	$	274
Real estate and development costs ⁽³⁾			$	5,960	$	923
Investments in unconsolidated affiliates ⁽⁴⁾			$	2,163	$	20,696

⁽¹⁾ The Company had a non-recurring fair value measurement for intangible assets that resulted in an impairment loss discussed in Note 3 “Intangible Assets and Goodwill.”

⁽²⁾The Company recorded an impairment loss to write down the value of capitalized development costs related to its oil and gas wells. The estimated fair value of the wells was determined using a discounted cash flow model. The loss was reported in the condensed consolidated statements of operations and comprehensive income or loss within impairment loss on intangible and long-lived assets and was included in the results of operations of the corporate segment.

⁽³⁾The Company had non-recurring fair value measurements of real estate assets discussed in Note 2 “Real Estate and Tangible Water Assets, Net.”

⁽⁴⁾The Company had a non-recurring fair value measurement of an investment in an unconsolidated affiliate’s equity securities held at cost discussed in Note 4 “Investments.”

Fair Value of Financial Instruments

The following table presents the carrying value and estimated fair value of the Company’s financial instruments which are not carried at fair value (in thousands):



	March 31, 2016				December 31, 2015
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Investments in unconsolidated affiliates equity securities	$	3,482	$	3,482	$	3,482	$	3,482

Financial liabilities:
Debt	$	158,584	$	169,555	$	155,966	$	166,769