VERIFIED STATEMENT OF FARHAD MANSOURIAN

My name is Farhad Mansourian and I am the General Manager of Sonoma-Marin Area
Rail Transit District (“SMART”). The purpose of this Statement is to summarize the steps taken by SMART in advance of construction of its commuter rail system on the line of railroad between Healdsburg and Ignacio, CA, to ensure that freight rail customers located on the same line would not lose rail service as a result of the SMART commuter rail construction. I also explain why the 115# rail SMART used for the line construction project is suitable for freight rail operations.

I joined SMART on September 23, 2011. As General Manager, I have responsibility for
all aspects of the agency, including operations, public safety, finance, engineering, systems,
community outreach, marketing, legal, and construction. Prior to joining SMART, I served as
Director of the Department of Public Works for Marin County, where I started my career as a
junior engineer, rising through the ranks to become the agency’s top executive in 2002. I am a licensed Professional Engineer and has a degree in Civil Engineering and Political Science from California State University, Sacramento.

1. From 1998 until 2011, there was no freight service on the Subject Line. In 2011,
Northwestern Pacific Railroad Company (“NWPCo”) , the lessee of the freight property
and operating rights of North Coast Railroad Authority (“NCRA”), restarted freight
service on the Subject Line. While NWPCo was restarting freight service, SMART was
conducting the preliminary engineering for reconstruction of the Subject Line to
accommodate commuter rail service. In 2011, there were numerous sidings on the
Subject Line, all of which had deteriorated after many years of no use. Many of the
sidings were not in a condition for freight service.

2. In advance of the construction and renewal of the Subject Line, SMART, NCRA and
NWPCo negotiated regarding which freight sidings would be rehabilitated and
connected to the main line and how the parties would share the cost of rehabilitation and
connection. It was agreed that NCRA and NWPCo would pay the costs associated with
rehabilitation of the freight sidings plus a share of the cost of the turn-outs to connect the sidings to the main line equivalent to what would have been spent if SMART were not
rebuilding for commuter rail service. It was agreed that SMART would pay the
“incremental” cost of the turn-outs – the costs of the turn-outs over and above the cost
that NCRA/NWPCo would have incurred in the absence of the commuter rail service. In
this fashion, the parties allocated the freight-related capital costs to NCRA/NWPCo and
the commuter rail- related capital costs to SMART.

3. Although several potential customers expressed interest in receiving freight rail service, no potential customer offered NCRA or NWPCo a traffic commitment that would have
permitted NCRA or NWPCo to meet its funding obligations to rebuild the all of the
former sidings. In other words, a number of shippers thought freight service would be
“nice” to have, but none of them offered to commit to a specific volume of service to
support the cost of re-establishing all of the sidings adjacent to their properties. Thus,
NCRA and NWPCo had to rely on their own funds to rebuild some number of the
sidings, without contractually-guaranteed freight revenue from any shippers.


4. Even without much demand for freight rail service, SMART agreed in 2011 to pay the
incremental cost of installation of turn-outs at four locations: Burdell South (MP 30.5);
Burdell North (MP 31.7); Park South (MP 39.2); and Park North (MP 39.7). SMART
also agreed to pay the incremental cost of up to twelve additional turn-outs for customers 4
requiring service from additional locations, if NCRA could demonstrate the
shipper/customer need for the additional sidings and turn-outs. The obligation for up to
twelve additional turn-outs required NCRA to show a freight need by January 31, 2014
in order to allow SMART to know the location of any additional turn-outs and
incorporate them in its plans for the line construction project.

5. NCRA did not show the freight need for any additional sidings by the January 31, 2014
deadline. Even five months after the deadline, NCRA had not shown the need for any
additional freight sidings. Even so, by May of 2014, in addition to two of the four
sidings it committed to in 2011, SMART also had installed three additional turn-outs:

Dairymen's Coop (MP 38.1); Adobe Lumber Spur (MP 41.9); and Willowbrook Farms
(MP 42.2) and had committed to install turnouts at addition Petaluma Transload Track
and Shamrock (MP 38.1). In the end, ten freight turn-outs were installed, with SMART
paying either the incremental cost for the turn-out or costs associated with integration of
the turn-outs into the SMART systems or Positive Train Control.

6. The May 20, 2014 Press Democrat article attached to the TRAC sbmission as Exhibit 7
identifies four disappointed potential freight customers: Lagunitas Brewing Company;
California Shingle and Shake; North Bay Property Advisors; and Mr. Glenn Kantock. I
will now discuss each of these potential freight customers.

7. Lagunitas Brewing Company. In April of 2013, Mr. Leon Sharyon of Lagunitas
Brewing Company requested freight service to Lagunitas from the siding serving the
former Adobe Lumber Company site, which Lagunitas apparently intended to lease for
the purpose of accepting rail shipments of barley. As noted above, SMART installed a 5
turn-out at the Adobe Lumber Spur (MP 41.9). Lagunitas Brewing Company receives
service from this location today. I cannot explain why Mr. Sharyon neglected to
mention to the Press Democrat reporter that he had requested service at the Adobe
Lumber Spur in writing. The Press Democrat article quotes Mr. Sharyon as saying it is
“silly” that shipments are not made to the Lagunitas brewery, but that is what he
requested on behalf of the company at the time decisions were made about how
Lagunitas would receive service.

8. California Shingle and Shake. California Shingle and Shake desired freight service
using the dilapidated siding shown in an image accompanying the May 20, 2014 Press
Democrat article. (The siding shown in the image depicts at least one crosstie resting
on top of the rail.) In the article, Mr. John Schunzel is reported to have said that California Shingle and Shake had previously shipped laminated shingles and plywood from Oregon and Washington by rail but was then (at the time of the article) using truck transportation and paying higher rates. However, from the time freight rail service was re-established in 2011 until the siding was disconnected from the main line in the summer of 2012, NWPCo did not handle a single railcar to or from California Shingle and Shake. Mr.
Schunzel may have been referring to California Shingle and Shake rail shipments before
the shut-down of the line in 1998, but in 2011-12 when rail service was available to
California Shingle and Shake, the company chose truck service even with its
(apparently) higher costs. California Shingle and Shake’s non-use of rail service in
2011-12 prompted SMART to ask NCRA and NWPCo several times in 2013-14 for
information regarding California Shingle and Shake’s future freight rail service needs,
but SMART never received the requested information.

9. North Bay Property Advisors. Mr. Nick Abbott, whose company (North Bay Property
Advisors) owned or operated a large warehouse in Santa Rosa, is quoted in the article as
saying a rail spur “would add value for the right kind of use.” The presence of a rail
siding certainly can create value when it is the right kind of use. However, no customer
in this Santa Rosa warehouse used rail service after service was restored in 2011.

10. Mr. Glenn Kantock. The article reports that Glenn Kantock wanted a siding at a property
near Airport Blvd. Mr. Kantock did not use rail service on even a single occasion after
service was restored in 2011.

11. When SMART’s Design-Build team was designing the track in advance of construction
of its commuter rail system on the line of railroad between Healdsburg and Ignacio,
SMART determined the weight of rail for the project based on several factors, including
the suitability for the anticipated future freight rail operations and the lighter weight
commuter rail trains. Based on the advice of our design team, the lighter rail was deem
appropriate and specified. Although some freight railroads use a heavier rail, SMART
concluded that 115# rail was sufficient for the current and anticipated freight operations
on the Healdsburg and Ignacio segment, because the composition of current and
foreseeable future freight traffic is not of the type which would require heavier rail.