INTANGIBLE ASSETS, NET AND GOODWILL

Intangible Assets:

The Company’s carrying amounts of its intangible assets were as follows (in thousands):



	December 31,
	2016		2015
Pipeline rights and water credits at Fish Springs Ranch	$	83,897	$	83,897
Pipeline rights and water rights at Carson-Lyon	25,569		24,831
Other, net of accumulated amortization	17,431		17,805
Total intangible assets, net	$	126,897	$	126,533

Fish Springs Ranch Pipeline Rights and Water Credits:

There are 13,000 acre-feet per-year of permitted water rights at Fish Springs Ranch. The existing permit allows up to 8,000 acre-feet of water per year to be exported to support the development in the Reno, Nevada area. Under a settlement agreement signed in 2007, the Pyramid Lake Paiute Tribe (the “Tribe”) agreed to not oppose any permitting activities for the pumping and export of groundwater in excess of 8,000 acre-feet of water per year, and in exchange, Fish Springs Ranch will pay the Tribe 12% of the gross sales price for each acre-foot of additional water that Fish Springs Ranch sells in excess of 8,000 acre-feet per year, up to 13,000 acre-feet per year. The obligation to expense and pay the 12% fee is due only if and when the Company sells water in excess of 8,000 acre-feet, and accordingly, Fish Springs Ranch will record the liability for such amounts as they become due upon the sale of any such excess water. Currently Fish Springs Ranch does not have regulatory approval to export any water in excess of 8,000 acre-feet per year from Fish Springs Ranch to support further development in northern Reno, and it is uncertain whether such regulatory approval will be granted in the future.

Impairment Losses during 2016:

There were no impairment losses recognized on intangible assets during the year ended December 31, 2016.

Impairment Losses during 2015:

As a result of the Company’s annual review of indefinite-lived intangible assets, using a discounted cash flow model, the Company recorded an impairment loss of $269,000, reducing the carrying value to $3 million. The loss was recorded in the consolidated statement of operations and comprehensive income or loss within impairment loss on intangible and long-lived assets. The loss was also recorded in the water resource and water storage operations segment results. This was the first such impairment recorded on this asset. There were no other impairment losses on any other intangible assets during the year ended December 31, 2015.

Goodwill:

The Company had a goodwill balance of $4.2 million at December 31, 2015. During 2016 the Company recorded an impairment loss of $4.2 million on goodwill related to the Citizens Homes, Inc. (“Citizens”) acquisition due to revised financial forecasts for the Southeast homebuilding operations as a result of several factors including weather that delayed new community openings, abandonment of certain opportunities to open new communities as the opportunities did not meet UCP’s underwriting criteria, and lower margins on older communities still in existence from the land purchased as part of the Citizens acquisition. The loss was reported in the Company’s Real Estate operations reducing the balance of the goodwill to zero at December 31, 2016. The revised forecasts also reduced the contingent consideration liability related to the Citizens acquisition by $2.3 million leaving a balance of $360,000 at December 31, 2016.

The Company estimated the fair value of goodwill based on applying the income approach by determining the present value of the estimated future cash flows at a discount rate. When estimating future cash flows, the Company makes various assumptions, including, but not limited to: (i) forecast adjusted pre-tax net income over a ten year period; (ii) weighted average cost of capital; (iii) terminal growth; and (iv) revenue growth and operating profit margin. The risk adjusted discount rate of 14.5% and terminal growth rate of 2.0% were applied to forecast adjusted pre-tax net income.

There were no other acquisitions, disposals, or impairments of goodwill during the years ended December 31, 2016 or December 31, 2015.