8.	OPERATING LEASES

The Company’s principal facility and its corporate headquarters are located at the Natural Energy Laboratory of Hawaii Authority (“NELHA”) at Keahole Point in Kailua-Kona, Hawaii. The Company leases

two

properties from the State of Hawaii under a

-year commercial lease expiring in

2035

and a

-year commercial lease expiring in

2037.

Under the terms of the existing NELHA leases, the Company could be required to remove improvements at the end of the lease term. Under generally accepted accounting principles in the United States, an entity should recognize the fair value of a liability for an asset retirement obligation in the period in which the retirement obligation is incurred, if a reasonable estimate of fair value can be made. If such an estimate cannot be made in the period the asset retirement obligation is incurred, the liability should be recognized when the fair value can be reasonably estimated. Based on communications with NELHA, management does

not

believe the projected cost for such removal to be material to the consolidated financial statements, or likely, given historical practices. However, conditions could change in the future. It is

not

possible to predict such changes or estimate any impact thereof.

The Company leases facilities, equipment and land under non-cancelable operating leases expiring through

2037.

One of its facility leases contains price escalations and a renewal option for

five

years. The land lease provides for contingent rentals in excess of minimum rental commitments based on a percentage of the Company’s sales. Contingent rental payments for the years ended

March

31,

2020,

2019

and

2018

were

$49,000,

$54,000

and

$49,000,

respectively.

Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Right-of-use assets and liabilities were recognized at

April 1, 2019

based on the present value of lease payments over the existing lease terms, using the Bank’s incremental borrowing rate based on the information available at recognition, and the Company has elected to exclude non-lease components. At

March 31, 2020,

the weighted average remaining lease term is

13.9

years, the weighted average discount rate is

7.5%

and the operating lease costs were

$592,000.

Supplemental balance sheet information related to leases at

March 31, 2020

consist of the following:

Operating leases	Balance Sheet Classification	(in thousands)
Right-of-use assets	Operating lease right-of-use assets, net	$	3,834

Current lease liabilities	Operating lease obligations	$	319
Non-current lease liabilities	Long-term operating lease obligations		3,519
Total lease liabilities		$	3,838

Maturities of lease liabilities at

March

31,

2020

are as follows:

Year ending March 31	(in thousands)
2021	$	593
2022		593
2023		537
2024		371
2025		371
Thereafter		3,693
Total undiscounted lease payments		6,158
Less: present value discount		(2,320	)
Total lease liability balance	$	3,838

Rent expense, including contingent rent, under operating leases were

$623,000,

$588,000

and

$578,000

for the years ended

March

31,

2020,

2019

and

2018,

respectively. Property taxes paid to the states of Hawaii and California were

$28,000,

$29,000

and

$11,000

for the years ended

March 31, 2020,

2019

and

2018,

respectively.