Imperial Valley Gateway Center, LLC - Imperial Regional Detention Facility Project Surveillance Report

Rating Summary

The revision of the rating Outlook to Negative reflects the California Legislature’s recent enrollment of a new law which, if signed into law by the Governor, will prevent the Imperial Regional Detention Facility (the “Facility”) from qualifying for the property tax exemption that it has historically received and result in a significant retroactive property tax liability. While this tax liability could be absorbed with a modified and repriced detention contract, it remains to be seen whether such a modification can be successfully implemented. Although not an anticipated outcome, KBRA believes that uncertainty with respect to this property tax liability heightens the potential risk of detention contract termination given the low threshold of termination for convenience provisions underpinning the detention contract.

The long-term rating continues to reflect KBRA’s view of on-going risks arising from political opposition to privately operated immigration detention…