For close to a decade, a federal immigrant detention center in Imperial County has avoided paying a large share of its property taxes by claiming that it should qualify as a charity.

Now, California is bringing that arrangement to an end and preventing similar ones in the future.

On Tuesday, Gov. Gavin Newsom signed Senate Bill 420, which prohibits detention centers in California from receiving the Welfare Exemption — a tax break that’s typically reserved for charities.

The legislation was introduced in response to a KPBS investigation earlier this year. The investigation found that the Imperial Regional Detention Facility and its nonprofit owner, the Brawley Community Foundation, had avoided paying at least $6 million in property taxes through the exemption.

State Sen. Steve Padilla of San Diego authored the bill. In a statement Wednesday, he said California residents should not be forced to subsidize private immigrant detention centers.

“Our laws should always reflect our values,” said Padilla, a Democrat whose district includes Imperial County. “We have closed this loophole so our tax dollars go back into enriching the community, not private detention profiteers.”

Timothy Kelley, a Brawley City Council member and Brawley Community Foundation board member who personally applied for the tax breaks, did not respond to a request for comment Wednesday.

Jeff Chi, File

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AP

California Gov. Gavin Newsom speaksin San Francisco on Nov. 9, 2023.

In its application for the credit, the foundation’s officials were open about their plans to build and run a detention facility. They argued that running the facility should qualify as charitable because it would reduce strain on government agencies.

The two agencies that jointly administer the Welfare Exemption, the California State Board of Equalization and the local county assessor’s office, raised some questions but ultimately signed off on the tax breaks.

On Wednesday, Board of Equalization spokesperson John Taylor told KPBS the agency was preparing to revisit that decision in light of the new law.

Imperial Valley immigrants’ rights groups have condemned the detention center’s use of the exemption and celebrated the bill as it advanced from the Legislature earlier this month.

“This is really clarifying to everyone,” Imperial Liberation Collaborative organizer Kristian Salgado told KPBS at the time. “I think it was addressing a very clear misuse of the Welfare Exemption — an outrageous misuse.”

The bill wasn’t backed solely by Democrats. It also received support from Republican lawmakers, including Assemblymember Jeff Gonzalez, who represents Imperial County and the Coachella Valley.

“This isn't about whether we agree or disagree on the underlying issues,” Gonzalez said on the Assembly floor earlier this year. “It's about making sure our tax code is applied fairly.”

The law is not retroactive, meaning that the foundation will not have to pay back any of its tax breaks from past years.

Still, it has created some uncertainty around the Imperial Regional Detention Facility’s future.

Earlier this year, Kelley warned that the U.S. Immigration and Customs Enforcement contractor that runs day-to-day operations at the detention center, Management and Training Corporation, has slim profit margins.

The detention center was originally built using municipal bonds acquired through an arrangement with neighboring La Paz County in Arizona. The foundation is still paying back that debt.

On Friday, the New York-based Kroll Bond Rating Agency downgraded its outlook for those bonds, writing that the bill “heightens the potential risk of detention contract termination.”