Moody's Ratings affirmed bond ratings for New Mexico's Otero County while warning risks remain over its detention facility, which serves as a federal immigration enforcement processing center.
The county maintained an A1 issuer rating, as well as ratings of A1 for hold-harmless gross receipts tax-backed debt sold in 2014 and A2 for 2020's subordinate lien gross receipts tax revenue bonds.
In a rating report on Friday, Moody's pointed to the county's "solid reserves, which will decline somewhat over the next two fiscal years due to rising costs and elevated enterprise risk tied to a new state law affecting its immigration processing center operations."
The Immigrant Safety Act, which took effect last week, requires New Mexico governments to terminate existing agreements involving the detention of individuals for federal civil immigration violations and
In March, Otero County commissioners
Revenue generated under ICE agreements is the sole source of payment for $14.33 million of outstanding debt from a
U.S. Department of Justice litigation filed in federal court this month challenging the state law's constitutionality led to its enforcement against Otero County's
"The county has indicated its intent to continue operations under its newly extended five-year ICE contract, while ongoing litigation delayed implementation of (the state law)," Moody's said. "While near-term operations are expected to continue, closure of the facility would pressure debt service coverage of these bonds and further strain the general fund given loss of rental payments."
Moody's added the county is exploring a lease purchase agreement with the facility's operator, Utah-based
An attempt by New Mexico's Justice Department to invalidate Otero County's contract with ICE
On March 31,
