DALLAS - Colorado issuers are seeking quick exits from their auction-rate debt after failed auctions drove interest costs up dramatically.

In Colorado Springs, the city-owned Memorial Health System is planning to refinance $272 million of bonds, representing more than 90% of its outstanding debt after interest on its auction-rate bonds more than doubled in recent weeks.

To the north, Denver and Aurora are hurrying the refinancing of $600 million of bonds to escape rates that are soaring from previous levels of about 3.5%.

Denver International Airport has about $500 million of auction-rate bonds that it plans to refund as fixed-rate securities, according to Denver debt administrator Margaret Danuser.

"We're moving as fast as we can," Danuser said. "We hope to come to market within four to six weeks."

Denver will shift to a term put structure in a deal led by co-managers Goldman, Sachs & Co. and Citi, with Depfa First Albany and Estrada Hinojosa & Co. as financial advisers.

Denver's booming eastern suburb of Aurora is planning to refinance $60.9 million of insured variable-rate debt issued in 2006 to build the Aurora Municipal Center amid weakening of the insured market. The city is also looking for a new structure for $40 million of insured auction-rate water bonds after a failed auction sent the rates on the debt to 5.44% from about 3.7%.

The maximum on Aurora's debt is set at 14%, while Denver's auction rate is limited to 5.25%. In October 2004, Aurora was paying an interest rate of 1.11%, officials said.

Danuser said she became concerned about auction-rate problems in November. Despite the crisis, the city has saved about $60 million by using auction-rate bonds issued in 2001 and 2002, she said.

"I don't think we've come close to wiping out our savings," she said. "It was kind of eye-popping how much we've saved compared to fixed rate."

Memorial sold auction-rate bonds in 2002 and 2004 to expand its main campus and remodel other facilities. Interest soared from an average of 3% to 6.5% last week, boosting monthly payment on the bonds by $800,000.

The rising interest cost reverses savings of about $2 million a year before the failed auctions.

Memorial Health System had been saving about $2 million a year using auction-rate bonds instead of more traditional fixed-rate financing.

At a meeting last week, the Memorial board of directors voted to hire a new financial adviser, Kaufman Hall of Skokie, Ill., to develop a refinancing structure. Kaufman replaces RBC Capital Markets.

Memorial officials said the cost of the auction-rate crisis for them depends on how quickly the health system can come to market with a new structure. The restructuring is expected to be ready in three to six months, officials said. The hospital system is considering variable-rate demand bonds or short-term, fixed-rate bonds.

The Colorado Springs City Council does not have to approve the deal because it is a refinancing instead of a new issue, officials said.

In November, Denver's Danuser was watching to see if the auction-rate crisis was a blip or a long-term problem.

"It's definitely broken, and it's not coming back anytime soon," she said. "However, we still believe in the short-term market."

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