Morgan Stanley chosen to advise on road leasing

Gov. Rendell yesterday selected Morgan Stanley & Co. to advise the administration on leasing the Pennsylvania Turnpike and other possible ways of raising money for transportation projects.

The investment banking and global finance company was hired to make a detailed analysis and offer recommendations about leasing the turnpike to a private operator or having the Pennsylvania Turnpike Commission "monetize" the toll road by borrowing against future toll revenues.

To generate $965 million a year for repairing Pennsylvania bridges and highways, Rendell proposes to lease the turnpike for about $12 billion. To raise about $760 million a year for SEPTA and other mass-transit agencies, the governor wants a 6.17 percent tax on oil company profits.

The state contract with Morgan Stanley calls for the company to receive 0.125 percent of the lease value, which in a $12 billion transaction would be a fee of $15 million, according to Doug Rohanna, the governor's spokesman. Rohanna said that members of the Morgan Stanley team had worked on toll-road financing for Indiana and Chicago as employees of Goldman Sachs.

Rendell has said draft legislation would be sent to the legislature within a few weeks.

Morgan Stanley, one of 48 companies that submitted "expressions of interest" in a turnpike deal, will be paid on a "success-fee basis," collecting its fee only when the state gets its funding, the governor's office said in a statement.

Rendell, who last month declined legislative leaders' requests for copies of the "expressions of interest," yesterday promised an "open and transparent process" in the transportation funding efforts.