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RELATED PARTY TRANSACTIONS | 12 Months Ended
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Aug. 31, 2019
RELATED PARTY TRANSACTIONS [Abstract] |
RELATED PARTY TRANSACTIONS | NOTE 14 – RELATED PARTY TRANSACTIONS On December 16, 2009, the Company entered into a Participation Agreement with the Rangeview District, whereby the Company agreed to provide funding to the Rangeview District in connection with the Rangeview District joining the South Metro Water Supply Authority (“SMWSA”). The Company provided funding of $22,200 and $198,200 for the fiscal years ended August 31, 2019 and 2018, respectively. Through the WISE Financing Agreement, to date the Company has made payments totaling $3,533,300 to purchase certain rights to use existing water transmission and related infrastructure acquired by the WISE project and to construct the connection to the WISE system. The amounts are included in Investments in water and water systems on the Company’s balance sheet as of August 31, 2019. The Company anticipates spending the following over the next five fiscal years to fund the Rangeview District’s purchase of its share of the water transmission line and additional facilities, water and related assets for WISE and to fund operations and water deliveries related to WISE: Estimated WISE Costs
|  | For the Fiscal Years Ended August 31, |
|  | 2020 |  |  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |
Operations |  | $ | 44,235 |  |  | $ | 32,033 |  |  | $ | 32,033 |  |  | $ | 32,033 |  |  | $ | 32,033 |
Water delivery |  |  | 430,350 |  |  |  | 858,000 |  |  |  | 858,000 |  |  |  | 858,000 |  |  |  | 858,000 |
Capital |  |  | 2,296,138 |  |  |  | 50,000 |  |  |  | 50,000 |  |  |  | 50,000 |  |  |  | 50,000 |
Other |  |  | 55,000 |  |  |  | 55,000 |  |  |  | 55,000 |  |  |  | 55,000 |  |  |  | 55,000 |
|  | $ | 2,825,723 |  |  | $ | 995,033 |  |  | $ | 995,033 |  |  | $ | 995,033 |  |  | $ | 995,033 |
The Company has outstanding notes receivable of $988,400 in the aggregate from the Rangeview District and the CAB, which are related parties, as discussed below: The Rangeview District is a quasi-municipal corporation and political subdivision of Colorado formed in 1986 for the purpose of providing water and wastewater service to the Lowry Range and other approved areas. The Rangeview District is governed by an elected board of directors. Eligible voters and persons eligible to serve as a director of the Rangeview District must own an interest in property within the boundaries of the Rangeview District. The Company owns certain rights and real property interests which encompass the current boundaries of the Rangeview District. Sky Ranch Metropolitan District Nos. 1, 3, 4 and 5 (the “Sky Ranch Districts”) and the CAB are quasi-municipal corporations and political subdivisions of Colorado formed for the purpose of providing service to the Company’s Sky Ranch property. The current members of the board of directors of the Rangeview District, each Sky Ranch District, and the CAB consist of three employees of the Company (including the Company’s President) and one independent board member. The Rangeview District In 1995, the Company extended a loan to the Rangeview District. The loan provided for borrowings of up to $250,000, is unsecured, and bears interest based on the prevailing prime rate plus 2% (7.25% at August 31, 2019). The maturity date of the loan is December 31, 2020. Beginning in January 2014, the Rangeview District and the Company entered into a funding agreement that allows the Company to continue to provide funding to the Rangeview District for day-to-day operations and accrue the funding into a note that bears interest at a rate of 8% per annum and remains in full force and effect for so long as the Lease remains in effect. Of the August 31, 2019 balance in Notes receivable - related parties, $961,300 includes borrowings by the Rangeview District of $546,500 and accrued interest of $414,800. Of the August 31, 2018 balance in Notes receivable - related parties, $880,700 includes borrowings by the Rangeview District of $484,000 and accrued interest of $396,700. Sky Ranch Metropolitan District Nos. 1, 3, 4 and 5 The Company had been providing funding to the Sky Ranch Districts, beginning in 2012 through 2016 by entering into annual Operation Funding Agreements with one of the Sky Ranch Districts obligating the Company to advance funding to the Sky Ranch District for the operation and maintenance expenses for the then-current calendar year. The Sky Ranch District paid the outstanding note receivable to the Company in November 2017. As of August 31, 2018, there was no outstanding balance under these agreements. In November 2014, but effective as of January 1, 2014, the Company entered into a Facilities Funding and Acquisition Agreement with a Sky Ranch District obligating the Company to either finance district improvements or to construct improvements on behalf of the Sky Ranch District subject to reimbursement. Each advance or reimbursable expense accrued interest at a rate of 6% per annum. No payments were required by the Sky Ranch District unless and until the Sky Ranch District issued bonds in an amount sufficient to reimburse the Company for all or a portion of the advances and costs incurred. The CAB agreed to repay the amounts owed by the Sky Ranch District under this agreement and the agreement was terminated pursuant to the 2018 FFAA (defined and described below). Sky Ranch Community Authority Board Pursuant to a certain Community Authority Board Establishment Agreement, as the same may be amended from time to time, Sky Ranch Metropolitan District No. 1 and Sky Ranch Metropolitan District No. 5 formed the CAB to, among other things, design, construct, finance, operate and maintain certain public improvements for the benefit of the property within the boundaries and/or service area of the Sky Ranch Districts. In order for the public improvements to be constructed and/or acquired, it is necessary for each Sky Ranch District, directly or through the CAB, to be able to fund the improvements and pay its ongoing operations and maintenance expenses related to the provision of services that benefit the property. In November 2017, but effective as of January 1, 2018, the Company entered into a Project Funding and Reimbursement Agreement (“PF Agreement”) with the CAB for the Sky Ranch property. The PF Agreement required the Company to fund an agreed upon list of public improvements for Sky Ranch with respect to earthwork, erosion control, streets, drainage and landscaping at an estimated cost of $13.2 million for calendar years 2018 and 2019. Each advance or reimbursable expense accrues interest at a rate of 6% per annum. On September 18, 2018, the parties entered into a series of agreements, including a Facilities Funding and Acquisition Agreement with an effective date of November 13, 2017 (the “2018 FFAA”), which supersedes and consolidates the previous agreements pursuant to which
| ● | the CAB agreed to repay the amounts owed by Sky Ranch Metropolitan District No. 5 to the Company totaling $857,900, and the previous Facilities Funding and Acquisition Agreement entered into between the Company and Sky Ranch Metropolitan District No. 5 in 2014 was terminated;
| ● | the PF Agreement and a June 2018 Funding Acquisition Agreement between the CAB and the Company totaling $2.4 million were terminated;
| ● | the CAB acknowledged all amounts owed to the Company under the terminated agreements totaling $3.3 million, as well as amounts the Company incurred to finance the formation of the CAB; and
| ● | the Company agreed to fund an agreed upon list of improvements to be constructed by the CAB with an estimated cost of $30,000,000 (including improvements already funded) on an as-needed basis for calendar years 2018–2023.
All amounts owed under the terminated agreements and all amounts advanced under the 2018 FFAA, collectively totaling $20 million, bear interest at a rate of 6% per annum. No payment is required of the CAB for advances made to the CAB or expenses incurred related to construction of improvements unless and until the CAB and/or Sky Ranch Districts issue bonds in an amount sufficient to reimburse the Company for all or a portion of advances or other expenses incurred. The CAB agrees to exercise reasonable efforts to issue bonds to reimburse the Company subject to certain limitations. In addition, the CAB agrees to utilize any available moneys not otherwise pledged to payment of debt, used for operation and maintenance expenses, or otherwise encumbered, to reimburse the Company. Any advances not paid or reimbursed by the CAB by December 31, 2058, shall be deemed forever discharged and satisfied in full. In 2018, the Company advanced the CAB $2.3 million to begin construction of improvements on the Sky Ranch property. In 2019, the Company advanced the CAB $17.7 million for the Sky Ranch property. The advances have been used by the CAB to pay for construction of public improvements and have been recorded as Inventories and subsequently expensed through Land development construction costs in the accompanying financial statements. If the Sky Ranch Districts and/or the CAB issues bonds and the CAB reimburses the Company, the reimbursement will reduce any applicable capitalized costs remaining in Inventories. In September 2018, effective as of November 13, 2017, the Company entered into an Operation Funding Agreement with the CAB obligating the Company to advance funding to the CAB for operation and maintenance expenses for the 2018 and 2019 calendar years. All payments are subject to annual appropriations by the CAB in its absolute discretion. The advances by the Company accrue interest at the rate of 6% per annum from the date of the advance. $27,100 of the balance of the Notes receivable – related parties at August 31, 2019, includes borrowings by the CAB of $25,500 and accrued interest of $1,600. The $25,500 balance of the Notes receivable – related parties at August 31, 2018, includes borrowings by the CAB of $25,500 and accrued interest of $0.

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 + Details
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