Darn, hit submit by accident. The town in Mexico is not meant in the lyrics; not in the New Mexican versions or this Mexican version, at any rate.

A Mexican version by E. Rodriguez et al. translates the title as "guardian owl."

Tecolote
Traditional
1
Tecolote, de donde vienes?
Vengo de la mar volando,
en busca de mi tecolota
que tambiín me anda buscando.
2
Tecolote, qué haces ahi,
sentado en esa pared?
Esperando a mi tecolota,
que me traiga de comer.
3
Tecolote de Guadiana,
sueño de la fantasia.
Para que vuelas de noche,
teniendo por tuyo el día?

Translation:

Owl, where do you come from?
I come flying from across the sea.
I am looking for my love
Who is also looking for me.
2
Owl, what are you doing there
Sitting on that stone wall?
I am waiting for my love
To bring me something to eat.
3
Guardian owl,
Fantasy dream,
Why do you fly only at night
When you also have the day?

Arrangement E. Rodriguez, D. Hidalgo, T. Mahal, F. Trujillo, L. Rodriguez.
Album, American Horizon.

http://www.loscenzontles.com/horizon/albumLyrics.php?Tecolote;Owl