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Note 7 - Leases

3 Months Ended

Mar. 31, 2024

Lessee, Operating and Financing Leases [Text Block]

Note 7. Leases

Operating Leases

Avalon leases golf carts and associated GPS equipment, furniture and fixtures for The Grand Resort and office copiers under operating leases. Our operating leases have remaining lease terms ranging from less than 1 year to 5.0 years. The weighted average remaining lease term on operating leases was approximately 3.0 years and 3.4 years at March 31, 2024 and December 31, 2023, respectively.

During the first three months of 2024 the Company did not record any new operating lease right-of-use assets or corresponding obligations under operating leases. During the first three months of 2023, the Company recorded operating lease right-of-use assets and corresponding obligations under the operating leases of $35,000.

Leased property and associated obligations under operating leases at March 31, 2024 and December 31, 2023 consists of the following (in thousands):

	March 31,		December 31,
	2024		2023
Operating lease right-of-use assets	$	1,254	$	1,270

Current portion of obligations under operating leases	$	417	$	432
Long-term portion of obligations under operating leases		837		838
Total obligations under operating leases	$	1,254	$	1,270

The weighted average discount rate on operating leases was 5.9% at both March 31, 2024 and December 31, 2023.

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, 2024 there were approximately 29.6 years remaining on the golf course and related facilities finance lease. At December 31, 2023 there were approximately 29.8 years remaining on the golf course and related facilities finance lease.

In addition, the Company also entered into lease agreements for a vehicle, golf course maintenance and restaurant equipment which were determined to be finance leases. At March 31, 2024, the vehicle, golf course maintenance and restaurant equipment have remaining lease terms ranging from less than 1 year to 4.8 years. The weighted average remaining lease term on the vehicles and equipment leases was approximately 3.4 years and 3.7 years at March 31, 2024 and December 31, 2023, respectively.

Leased property and associated obligations under finance leases at March 31, 2024 and December 31, 2023 consists of the following (in thousands):

	March 31,			December 31,
	2024			2023
Leased property under finance leases	$	13,136		$	13,131
Less accumulated amortization		(7,556	)		(7,420	)
Leased property under finace leases, net	$	5,580		$	5,711

Current portion of obligations under finance leases	$	197		$	198
Long-term portion of obligations under finance leases		585			598
Total obligations under finance leases	$	782		$	796

The weighted average discount rate on finance leases was 6.3% at both March 31, 2024 at December 31, 2023, respectively.

For the three months ended March 31, 2024 and 2023, components of lease expense were as follows (in thousands):

	Three Months Ended
	March 31,
	2024		2023
Operating lease cost:
Rental expense	$	68	$	74

Finance lease cost:
Depreciation expense	$	137	$	121
Interest expense		9		7
Total finance lease cost	$	146	$	128

For the twelve months ending March 31, future commitments under long-term, operating and finance leases are as follows (in thousands):

	Finance		Operating			Total
2025	$	244	$	482		$	726
2026		181		433			614
2027		149		261			410
2028		106		162			268
2029		56		57			113
Thereafter		359		-			359
Total lease payments		1,095		1,395			2,490
Less: imputed interest		313		141			454
Total		782		1,254	#		2,036
Less: current portion of obligations under leases		197		417			614
Long-term portion of obligations under leases	$	585	$	837	#	$	1,422