Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Substantially all of our Co-Investment Ventures include buy/sell provisions and substantially all of our Developer CO-JVs include mark to market provisions. Under most of these provisions and during specific periods, a partner could make an offer to purchase the interest of the other partner and the other partner would have the option to accept the offer or purchase the offering partner’s interest at that price or in the case of a mark to market provision, we have the option to purchase the Developer Partner’s ownership interest at the established market price or sell the multifamily community. In June 2017, we issued buy/sell notices related to two MW CO-JVs for a combined purchase price of $24.3 million in CO-JV equity. The MW Co-Investment Partner gave notice which effectively elected to our purchase of the MW CO-JV’s equity interest. In response, we gave notice deferring the purchase of MW CO-JV’s interest until November 2017. During this period or the end of the deferral period, we have certain rights, including the right to acquire the MW CO-JV interests, jointly sell the multifamily community or to issue a new buy/sell notice. As of June 30, 2017, no other such buy/sell offers are outstanding or mark to market provisions are available.

In the ordinary course of business, the multifamily communities in which we have investments may have commitments to provide affordable housing. Under these arrangements, we generally receive from the resident a below market rent, which is determined by a local or national authority. In certain markets, a local or national housing authority may make payments covering some or substantially all of the difference between the restricted rent paid by residents and market rents. In connection with our acquisition of The Gallery at NoHo Commons, we assumed an obligation to provide affordable housing through 2048. As partial reimbursement for this obligation, the California housing authority will make level annual payments of approximately $2.0 million through 2028 and no reimbursement for the remaining 20-year period. We may also be required to reimburse the California housing authority if certain operating results are achieved on a cumulative basis during the term of the agreement. At the time of the acquisition, we recorded a liability of $14.0 million based on the fair value of the terms over the life of the agreement. In addition, we record rental revenue from the California housing authority on a straight-line basis, deferring a portion of the collections as deferred lease revenues. As of June 30, 2017 and December 31, 2016, we have approximately $18.8 million and $19.5 million, respectively, of carrying value for deferred lease revenues related to The Gallery at NoHo Commons.

As of June 30, 2017, we have entered into construction and development contracts with approximately $70.0 million remaining to be paid. These construction costs are expected to be paid during the completion of the development and construction period, generally within 18 months.

Future minimum lease payments due on our lease commitment payables, primarily related to our corporate office lease which expires in 2024, are as follows (in millions):



Year	Future Minimum Lease Payments
July through December 2017	$	0.3
2018	0.8
2019	0.8
2020	0.8
2021	0.8
Thereafter	2.4
Total	$	5.9

We are also subject to various legal proceedings and claims which arise in the ordinary course of business, operations and developments. Matters which relate to property damage or general liability claims are generally covered by insurance. While the resolution of these legal proceedings and claims cannot be predicted with certainty, management believes the final outcome of such matters will not have a material adverse effect on our consolidated financial statements.

Monogram Residential Trust, Inc. 10-Q