New Mexico county seeking to avoid bond default met illegally, AG says

Bloomberg News

A New Mexico county's race to avoid a bond default violated the Open Meetings Act, according to the state attorney general.

Otero County's March 13 emergency commission board meeting failed to meet the state's legal requirements for bypassing standard public notice and transparency procedures, thereby invalidating any action taken, New Mexico Attorney General Raúl Torrez announced on Friday.

At that meeting, the county commission approved a resolution to replace a now-expired intergovernmental service agreement with U.S. Immigration and Customs Enforcement with a five-year contract that will allow the county to make a nearly $5.26 million debt service payment due April 1.

Revenue generated under ICE agreements is the sole source of payment on $18.48 million of outstanding bonds from a $62.305 million unrated jail project revenue bond issue the county sold in 2007 to finance a 1,096-bed facility.

The New Mexico Department of Justice determined the expiration of the ICE contract "was a known and predictable deadline, not an unforeseen event" and the meeting's justification — the upcoming debt service payment — "stemmed from internal planning failures, not a legitimate emergency."

There was no immediate comment from the county, which has until the end of the business day on Monday to provide an explanation and response to the department.

In a March 17 statement, the county said the March 15 expiration of the previous ICE contract was not confirmed until the subsequent agreement was received and reviewed on March 12 and steps were taken to notify the public about the emergency meeting by contacting media organizations and posting a meeting notice in the government building.  

Potential violations of the Open Meetings Act, as well as New Mexico's Immigrant Safety Act, which takes effect May 20, were raised by Democratic State Rep. Sarah Silva in a letter last week to Torrez, according to local media reports.

The Immigrant Safety Act signed into law by Gov. Michelle Lujan Grisham in February takes effect May 20. It requires the state and local governments to terminate existing agreements involving the detention of individuals for federal civil immigration violations and prohibits new, extended or renewed agreements.

At their emergency meeting, Otero County commissioners authorized the initiation of litigation in state and federal courts over constitutional prohibitions against contract impairment and a New Mexico statute that specifically prohibits any laws that would impair existing revenue bonds.

The county said it takes no position on immigration policy and that a default would give bondholders the right to foreclose on the detention facility, according to its March 17 statement. 

"The board's action was taken solely to protect legal obligations incurred in 2007, obligations the current commission inherited and is legally bound to honor," it said. "The county is evaluating all available legal options to protect its bond obligations, its credit standing, and the economic wellbeing of the community."