Note 8 - Leases

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Lessee, Operating and Financing Leases [Text Block]

Note

8.

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. 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

March 31, 2021.

During the

first

three

months of

2021,

the Company entered into a new operating lease agreement for golf cart GPS equipment. The Company recorded an operating lease right-of-use asset and corresponding obligation under the operating lease of approximately

$37,000.

Leased property and associated obligations under operating leases at

March 31, 2021

and

December 31, 2020

consists of the following (in thousands):

	March 31,		December 31,
	2021		2020
Operating lease right-of-use assets	$	1,726	$	1,728
Current portion of obligations under operating leases	$	532	$	529
Long-term portion of obligations under operating leases		1,194		1,199
Total obligations under operating leases	$	1,726	$	1,728

The weighted average discount rate on operating leases was

4.7%

at

March 31, 2021

and

December 31, 2020.

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

March 31, 2021

there were approximately

32.6

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

March 31, 2021,

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

1

to

4.3

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

2.8

years at

March 31, 2021.

Leased property and associated obligations under finance leases at

March 31, 2021

and

December 31, 2020

consists of the following (in thousands):

	March 31,			December 31,
	2021			2020
Leased property under finance leases	$	12,311		$	12,112
Less accumulated amortization		(6,518	)		(6,377	)
Leased property under finace leases, net	$	5,793		$	5,735
Current portion of obligations under finance leases	$	333		$	333
Long-term portion of obligations under finance leases		546			560
Total obligations under finance leases	$	879		$	893

The weighted average discount rate on finance leases was

4.7%

at

March 31, 2021

and

4.5%

at

December 31, 2020.

For the

three

months ended

March 31, 2021

and

2020,

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

	Three Months Ended
	March 31,
	2021		2020
Operating lease cost:
Rental expense	$	84	$	89
Finance lease cost:
Depreciation expense	$	141	$	131
Interest expense		13		11
Total finance lease cost	$	154	$	142

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

March 31, 2021

are as follows (in thousands):

	Finance		Operating		Total
2022	$	368	$	596	$	964
2023		163		537		700
2024		111		385		496
2025		103		194		297
2026		41		153		194
Thereafter		405		-		405
Total lease payments		1,191		1,865		3,056
Less imputed interest		312		139		451
Total		879		1,726		2,605
Less: current portion of obligations under leases		333		532		865
Long-term portion of obligations under leases	$	546	$	1,194	$	1,740