10. Related Parties

The Company, BFC and Bluegreen are entities under common control. The controlling shareholder of the Company and Bluegreen is BFC. Shares of BFC’s capital stock representing a majority of the voting power are owned or controlled by the Company’s Chairman and Vice Chairman, both of whom are also executive officers of the Company, executive officers and directors of BFC and Chairman and Vice Chairman, respectively, of Bluegreen. The Company, BFC and Bluegreen share certain office premises and employee services, pursuant to the agreements described below.

Effective December 1, 2012, the Company entered into an agreement with BFC under which the Company provides office facilities to BFC and is reimbursed by BFC based on cost. BFC also provides risk management services to the Company and BFC is reimbursed by the Company based on cost. The Company’s employees are provided health insurance under policies maintained by Bluegreen for which Bluegreen is reimbursed at cost.

The table below shows the effect of these related party agreements and arrangements on the Company’s Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014 (in thousands):



		For the Three Months Ended		For the Six Months Ended
		June 30,		June 30,
		2015	2014	2015	2014
Other revenues	$	96	104	195	219
Expenses:
Employee compensation and benefits		(247)	(145)	(481)	(215)
Other - back-office support		(53)	(42)	(83)	(85)
Net effect of affiliate transactions
before income taxes	$	(204)	(83)	(369)	(81)

On October 30, 2013, Renin, which is owned 81% by the Company and 19% by BFC, was formed by the Company and BFC to complete the Renin Transaction. Bluegreen funded approximately $9.4 million of the Renin Transaction consideration in the form of a loan and revolver facility and the remaining funds necessary to complete the Renin Transaction were funded by BBX Capital and BFC pro rata in accordance with their percentage equity interests in Renin. Renin recognized $91,000 and $307,000 of interest expense under the Bluegreen loan for the three months and six months ended June 30, 2014, respectively.

As disclosed in Note 2, on April 2, 2013, the Company invested $71.75 million in Woodbridge in exchange for a 46% equity interest in Woodbridge. The investment was made in connection with Woodbridge’s acquisition of the publicly held shares of Bluegreen. BFC holds the remaining 54% of Woodbridge. The Company contributed $60 million in cash and issued to Woodbridge an $11.75 million note payable in connection with the Company’s acquisition of its 46% equity interest in Woodbridge. During each of the three month periods ended June 30, 2015 and 2014, the Company recognized $147,000 of interest expense in connection with the Woodbridge note payable. During each of the six month periods ended June 30, 2015 and 2014, the Company recognized $294,000 of interest expense in connection with the Woodbridge note payable. The Company’s Board of Directors has approved the repayment in full of the $11.75 million Woodbridge note payable in connection with settlement of the Bluegreen shareholder litigation by Woodbridge.

On May 8, 2015, BFC, BBX, Woodbridge, Bluegreen and their respective subsidiaries entered into an “Agreement to Allocate Consolidated Income Tax Liability and Benefits” pursuant to which, among other customary terms and conditions, the parties agreed to file consolidated federal tax returns. The parties will calculate their respective income tax liabilities and attributes as if each of them were a separate filer. If any tax attributes are used by another party to the agreement to offset its tax liability, the party providing the benefit will receive an amount for the tax benefits realized.

The Company will be included in BFC’s consolidated federal tax return; however, income taxes will continue to be recognized by the Company on a separate return basis and any taxable income or loss will be settled with BFC under the tax allocation agreement discussed in the immediately preceding paragraph. The computation of taxable income or refunds, including the effects of AMT, would be exactly the same as if the Company was filing its federal tax return with the IRS. As such, the Company will only consider its operations as sources of taxable income in determining the need for a deferred tax valuation allowance for its deferred tax assets. As a consequence, the Company will continue to maintain a full deferred tax valuation allowance for its deferred tax assets.