Two New York colleges plan to take different paths to solve crises caused by 200 basis point spikes on variable-rate tax-exempt bonds with weekly resets insured by Radian Asset Assurance Inc., the Dormitory Authority of the State of New York announced yesterday at its monthly board meeting. Pratt Institute, an art college in Brooklyn, and Mount Saint Mary College, a graduate and undergraduate college in Newburgh, have each paid more than $100,000 in increased debt service since Fitch Ratings downgraded Radian’s insurer financial strength rating to A-plus from AA on Sept. 5. Fitch put the guarantor on an evolving credit watch when it became clear that a merger between its parent company and another mortgage insurer had failed. The DASNY board gave preliminary approval to Pratt’s plans to refund the Radian-insured bonds sold in 2005 at a par of $19.7 million. The refunding will be part of a larger deal that includes $56.3 million, which includes the 2005 series as well as bonds issued in 1999 and $37.5 million of new money that would finance the construction of a new multi-level academic and administrative facility and some equipment. The Series 2008 bonds will have maturities up to 30 years. DASNY senior financial analyst Deborah DeGenova said that Pratt was soliciting proposals for enhancement of the refunding bonds but that it was unclear at this time whether they would use bond insurance or a letter of credit. The increased interest rates since Radian’s downgrade have cost the college an additional $108,000 due to the reduced marketability of the bonds under the Radian name, she said. “Right now the additional cost to them is around $9,000 to $14,000 a week because they’re paying 6% on the bonds as opposed to when they get that different insurer,” DeGenova said. Repeated calls to Pratt chief financial officer Edmund Rutkowski were not returned yesterday. Details about when the 2008 bonds would price or which firms would comprise the financing team were not available yesterday. Mount Saint Mary plans to wrap its 2005 Radian insured bonds with a direct pay letter of credit from JPMorgan Chase Bank NA, though the bank’s involvement hasn’t been finalized. The higher interest rate resets on the bonds that sold at a par of $29.3 million have cost the college an additional $174,000. The direct pay letter of credit would replace an existing letter of credit from Citizens Bank that provided liquidity. Under the proposed new arrangement, JPMorgan would issue a single letter of credit that would provide both credit enhancement and liquidity for the financing while the Radian bond insurance policy would remain in place. The new arrangement would require Radian’s approval, which DASNY staff said was expected. Mount Saint Mary finance officer Richard Morgan said he hoped the new letter of credit would be in place by the end of the year. George K. Baum & Co. is the remarketing agent on both 2005 issues. Baum executive vice president Joseph Bosch said that he expects the firm will continue to serve as remarketing agent for the Mount Saint Mary College bonds, but that he did not know whether Baum would have a role in Pratt’s bonds because the institute hadn’t made a final decision on what form — either fixed or variable rate — its refunding bonds would take. The DASNY board also approved the sale of $190.9 million of bonds and gave preliminary approval to more $956 million of bonds on behalf of three universities. Montefiore Medical Center in the Bronx plans to current refund approximately $143 million of FHA-insured mortgage hospital revenue bonds, series 1999A and to advance refund $15.9 million of FHA-insured mortgage hospital revenue bonds, series 2000. The bonds will be sold through as fixed rate through negotiated sale with maturities up to 40 years. Details on the financing team and when the bonds would be sold were not available yesterday. The Nassau County Board of Cooperative Service plans to sell $31.6 million of tax-exempt fixed rate bonds to refund certain maturities of series 2001A and series 2003 bonds. Loop Capital Markets LLC will lead manage the sale and Orrick, Herrington & Sutcliffe LLP is bond counsel. In addition to Pratt, preliminary approvals yesterday included $424.3 million on behalf of New York University to acquire and renovate an office building and other projects, $400 million on behalf of Columbia University to build a new science center and other projects, and $133 million on behalf of Cornell University for refunding and renovations.