ARLINGTON – The mortgage crisis will probably force Arlington to reissue some bonds for the new Dallas Cowboys stadium at a cost of about $2 million.

The company insuring the city bonds has been downgraded by all three major rating agencies since the spring. MBIA Insurance Corp., like its competitors, was heavily involved in backing mortgaged-based bonds, in addition to insuring municipal debt.

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The Cowboys' new stadium is well under way in Arlington.

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Those investment rating drops caused some stadium bonds to vary wildly after remaining steady at less than 4 percent.

The rate jumped to 7 percent in March, quickly dropped and then spiked again to 7.75 percent in June.

The council decided informally Tuesday afternoon to convert the "synthetic fixed rate" bond, which has elements of fixed and variable rates, to a standard fixed rate.

"I don't think we have a choice," Mayor Robert Cluck told the council.

The volatility affects nearly $164.3 million worth of stadium bonds.

The rest of the $298 million in bonds was sold at a fixed rate of less than 5 percent.

The total cost for switching to a fixed rate is estimated at about $5 million.

However, the city saved about $3 million in interest because of the decision to go with the synthetic fixed rate in 2005.

"I don't fault anyone for this but the market," council member Mel LeBlanc said.

Governments often insure their bonds through MBIA or its competitors because they hold the highest possible rating.

That allows the bonds to be sold at a lower interest rate, saving cities money.

But now, council members said, they aren't willing to take additional risks.

The city could wait to see whether the market rebounds and MBIA regains its top rating. The council also could go to another bond insuring company.

Marlin Mosby, managing director of Public Financial Management, which advised the city on stadium finances, said the council already tried the wait-and-see option after the rate spiked in March. He said it's not clear where the rate will end up.

He also said there are only two insurers left with the highest rating, and one might be on shaky ground.

"We can't tell you that we won't be back here in three months," Mr. Mosby said about those options.

He said switching to a fixed rate, probably about 5 percent, will cost a little more but will protect the city from financial uncertainty.

These problems emerged after big bond insurance companies expanded their businesses. They started insuring bonds backed by mortgages and then were hit hard when default rates skyrocketed.

Despite the trouble with the market, officials said the city's share of the Cowboys stadium costs is turning out less than expected.

The city expected the bonds to be paid off by 2027 and cost the city $495 million, including interest. Due to higher than expected sales tax revenue, it is projected that the bonds now will be paid off by 2023 and cost $465 million. That assumes no further increase in sales tax revenue.

By doing nothing, Mr. Mosby said, the city's ultimate cost could range from $450 million to $550 million, depending on whether MBIA rebounds.

"The risk on the backside of doing nothing is just too big," he said.