Commissioners in Otero County, New Mexico, reapproved a federal immigrant detention contract tied to outstanding bonds after the state's justice department determined previous approval
Wednesday's action by the three-member county board repeated its March 13 passage of a five-year, $283 million intergovernmental service agreement with U.S. Immigration and Customs Enforcement for the bond-financed detention facility. With the March 15 expiration of the previous ICE agreement, the county was expecting to default on
Revenue generated under ICE agreements is the sole source of payment on $18.48 million of outstanding bonds from a
"The county's position remains that the March 13 emergency meeting was lawfully convened, and tonight's meeting is being held as a matter of good governance and to provide the public with a full additional opportunity to participate, not as a concession that anything was done wrong," County Attorney Roy Nichols said.
The ICE contract still faces challenges under other state laws.
While New Mexico's justice bureau indicated approval of the contract at Wednesday night's special board meeting may cure the Open Meetings Act violation, it contended for the first time that the ICE agreement is void because it lacks state law-required approval by the state Department of Finance and Administration secretary, according to Nichols.
"The state statutory approval requirement cannot extinguish the federal government's contractual rights under a fully executed federal contract," he said. "The county also notes that every prior IGSA it ever executed with ICE for the operation of this facility would be void under the bureau's theory, as none of them attained DFA approval."
A New Mexico law that takes effect May 20 also poses a threat to the bonds.
The Immigrant Safety Act signed into law by Gov. Michelle Lujan Grisham in February requires the state and local governments to terminate existing agreements involving the detention of individuals for federal civil immigration violations and
Nichols said without the ICE contract, the bonds would default and bondholders would have the right to foreclose on the facility. He warned of potential downgrades after "multiple bond rating agencies" reached out to the county this week with concerns.
"A lower credit rating means every future dollar the county borrows to fund roads, schools, public safety and other infrastructure costs, or more at a minimum, taxpayers will pay higher interest rates on future projects compared to what we pay today," Nichols said. "In a worst-case scenario, we may have difficulty accessing capital markets at all, and this will not be limited to Otero County.
"The state of New Mexico's own investment reputation in the bond market will be affected by the signal that it sends to investors about whether the state will honor the statutory and contractual framework on which the county revenue bonds are issued and secured," he added.
County commissioners reapproved a resolution authorizing the procurement of outside litigation counsel. Nichols previously pointed out constitutional prohibitions against contract impairment and a New Mexico statute that specifically prohibits any laws that would impair existing revenue bonds.
Otero County last sold bonds in 2020 with a $8.355 million subordinate lien county
