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As the lessor, the Town recognizes a long-term lease receivable and deferred inflow of resources for the use of the Trooper Barracks Building by the state police. The lease agreement runs for 20 years starting December 1, 2009 and ending November 30, 2029 with a five year renewal option beginning on December 1, 2029 and ending November 30, 2034. The agreement states that the remaining monthly payments will be $7,400 per month through November 30, 2024, $8,247 per month through November 30, 2029, and then if the renewal is granted, the additional five-year term will be negotiated at the time of the renewal request. As the Town built this building as part of the lease agreement, to the specifications agreed upon with the lessee, the Town reasonably expects the lease agreement to be renewed and thus includes the five-year renewal as part of the lease term. The discount rate applied to this lease is 3.5% as determined by the bond issued to finance the construction of the building. The value of the lease receivable as of December 31, 2024 is $710,959. The value of the deferred inflow of resources is $560,190 at December 31, 2024. Fiscal Year Ending December 31, Principal Interest Total 2025 $ 61,659 $ 37,305 $ 98,964 2026 63,852 35,112 98,964 2027 66,123 32,841 98,964 2028 68,474 30,490 98,964 2029 70,910 28,054 98,964 2030 and thereafter 379,941 98,384 478,325 Total $ 710,959 $ 262,186 $ 973,145 Lease Payable—The Town is a lessee for various leases of equipment. The Town recognizes a lease liability and an intangible right-to-use lease asset in the financial statements. The Town recognizes leases liabilities if they are considered significant individually or in the aggregate to the financial statements. Key estimates and judgments related to leases include how the Town determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments. The Town uses interest rates charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the Town generally uses its estimated incremental borrowing rate as the discount rate for leases. The lease terms include the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the Town is reasonably certain to exercise. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that Town is reasonably certain to exercise. The Town monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the right-to-use asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability. Right-to-use assets are reported with other capital assets and lease liabilities are reported with long- term debt on the statement of net position. - 37 -