NOTE 2. ACCOUNTING FOR LEASES

The Company adopted Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842), (“ASC 842”)” which requires leases with durations greater than twelve months to be recognized on the balance sheet. The Company adopted the standard using the modified retrospective approach with an effective date as of the beginning of its fiscal year, January 1, 2019. At January 1, 2019, the Company recorded a transition adjustment for the right of use assets of $16.4 million offset by short- and long-term lease liabilities of $0.9 million and $15.5 million, respectively, properly treated as a non-cash item in the Consolidated Statement of Cash Flows. Prior year financial statements were not recast under the new standard and, therefore, those amounts are not presented below. The Company elected the package of transition provisions available for expired or existing contracts, which allowed it to carryforward its historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs.

For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of the lease payments over the lease term. Many of the Company’s leases include rental escalation clauses, renewal options and/or termination options that are factored into its determination of lease payments when appropriate. As permitted by ASC 842, the Company elected not to separate non-lease components from their related lease components.

When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of its leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental borrowing rate to discount the lease payments based on information available at lease commencement.

As of September 30, 2019, the Company’s right of use assets consisted of the Parking Lot Lease, the Driveway Lease (as defined and discussed in NOTE 6. RELATED PARTY TRANSACTIONS), as well as certain billboard leases.

The table below presents information related to the lease costs for operating leases during 2019 (in thousands):


	Three months ended		Nine months ended
	September 30, 2019		September 30, 2019
Short-term lease costs	$	82	$	258
Long-term lease costs		372		1,114
Total lease costs	$	454	$	1,372

Upon adoption of the new lease standard, incremental borrowing rates used for existing leases were established using the rates in effect as of the lease inception or modification date. The weighted-average incremental borrowing rate of the leases presented in the lease liability as of September 30, 2019 was 4.33%.

The weighted-average remaining lease term of the leases presented in the lease liability as of September 30, 2019 was 21.8 years.

Following is the undiscounted cash flow for the remaining three months of the current year, for each of the next four years and total of the remaining years to the operating lease liabilities recorded on the balance sheet (in thousands):


	Operating
	Leases
Year ending December 31,
2019	$	368
2020		1,446
2021		1,432
2022		1,078
2023		1,072
Thereafter		19,084
Total minimum lease payments		24,480
Less: amount of lease payment representing interest		(8,694)
Present value of future minimum payments		15,786
Less: current obligations under leases		(797)
Long-term lease obligations	$	14,989

Cash paid related to the operating leases presented in the lease liability for the nine months ended September 30, 2019 was $1.1 million.