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					NEW ISSUE—BOOK ENTRY ONLY                                                                            RATINGS: Fitch:  AA
                                                                                                            Moody’s:  Aa3
                                                                                                   Standard & Poor’s: AA
                                                                                             (see “RATINGS” and “SALE BY
                                                                                           COMPETITIVE BIDDING” herein)
          In the opinion of Bond Counsel to the City, under existing statutes and court decisions and assuming continuing
compliance with certain tax covenants described herein, (i) interest on the Bonds is excluded from gross income for federal income
tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986 (the “Code”), except that no opinion is expressed as to
such exclusion of interest on any Series 2006B Bond for any period during which such Series 2006B Bond is held by a person who,
within the meaning of Section 147(a) of the Code, is a “substantial user” of the facilities financed with the proceeds of the Series
2006B Bonds or a “related person”, (ii) interest on the Series 2006A Bonds is not treated as a preference item in calculating the
federal alternative minimum tax imposed on individuals and corporations under the Code; such interest, however, is included in the
adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such
corporations; and (iii) interest on the Series 2006B Bonds is treated as a preference item in calculating the alternative
minimum tax imposed on individuals and corporations under the Code. See “TAX MATTERS” herein for a description of
certain provisions of law which may affect the federal tax treatment of interest on the Bonds. In addition, in the opinion of Bond
Counsel, under the existing statutes of the Commonwealth of Virginia, interest on the Bonds is not includable in computing the
Virginia income tax.
                                                           $35,055,000
                                       City of Roanoke, Virginia
                                             GENERAL OBLIGATION BONDS
                                                  CONSISTING OF
                  $29,555,000                                                          $5,500,000
        GENERAL OBLIGATION PUBLIC                                             GENERAL OBLIGATION PUBLIC
      IMPROVEMENT BONDS, SERIES 2006A                                       IMPROVEMENT BONDS, SERIES 2006B
             (Not Subject to AMT)                                                   (Subject to AMT)




Dated: Date of Delivery                                                        Due: February 1, as shown on the inside cover
          This Official Statement has been prepared by the City of Roanoke to provide information on the Bonds. Selected
information is presented on this cover page for the convenience of the reader. To make an informed decision regarding the Bonds, a
prospective investor should read this Official Statement in its entirety.
Purpose                      The proceeds of the Bonds will be used to pay the costs of various public improvement projects of and for
                             the City and the Roanoke Redevelopment and Housing Authority (see “INTRODUCTION” on page 1 of
                             this Official Statement).
Issued Pursuant to           The Bonds will be issued in accordance with the Public Finance Act of 1991, Title 15.2, Chapter 26, of
                             the Code of Virginia, 1950. The City Council of the City adopted resolutions on June 16, 2003, March
                             15, 2004 and June 20, 2005 authorizing the issuance and sale of the Bonds.
Security                     The Series 2006A Bonds and the Series 2006B Bonds (collectively, the “Bonds”) will be general
                             obligations of the City, and the full faith and credit of the City will be irrevocably pledged to the punctual
                             payment of the principal of and premium, if any, and interest on the Bonds as they become due.
Interest Payment Dates       February 1 and August 1, beginning August 1, 2006
Redemption Provisions        See inside cover
Denomination                 $5,000 or whole multiples thereof
Sale Date                    January 26, 2006
Closing/Delivery Date        On or about February 8, 2006
Registration                 Book-entry only; Cede & Co., as nominee for The Depository Trust Company
Registrar/Paying Agent       Director of Finance, City of Roanoke, Virginia
Financial Advisor            BB&T Capital Markets, a division of Scott & Stringfellow, Inc., Richmond, Virginia
Bond Counsel                 Hawkins Delafield & Wood LLP, New York, New York
Issuer Contact               Director of Finance, City of Roanoke, (540) 853-2821
Dated: January 26, 2006
                                                      $35,055,000
                                                  CITY OF ROANOKE
                                    GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS
Dated: Date of Delivery                                                                                      Due: February 1, as shown below
                          MATURITIES, AMOUNTS, INTEREST RATES AND PRICES OR YIELDS
                                                           (BASE CUSIP NUMBER 770077)




                                                       $29,555,000 SERIES 2006A BONDS

                                                   Initial                                                                      Initial
                                                 Reoffering                                                                   Reoffering
 Year of         Principal         Interest       Price or         CUSIP                 Year of      Principal    Interest    Price or    CUSIP
 Maturity         Amount             Rate          Yield*          Suffix                Maturity      Amount        Rate       Yield*     Suffix

  2007          $1,725,000         4.50 %          3.20%            ZF5                    2017     $1,335,000 †    5.00 %     3.85%**     ZR9
  2008           1,745,000         3.50            3.21             ZG3                    2018      1,350,000 †    4.00       @100        ZS7
  2009           1,750,000         3.50            3.25             ZH1                    2019      1,370,000 †    4.00       4.09        ZT5
  2010           1,765,000         4.00            3.30             ZJ7                    2020      1,390,000 †    4.00       4.14        ZU2
  2011           1,770,000         4.00            3.38             ZK4                    2021      1,415,000 †    5.00       4.10**      ZV0
  2012           1,265,000         3.625           3.46             ZL2                    2022      1,435,000 †    4.125      4.24        ZW8
  2013           1,280,000         4.00            3.55             ZM0                    2023      1,465,000 †    4.20       4.28        ZX6
  2014           1,295,000         4.00            3.64             ZN8                    2024      1,495,000 †    4.20       4.32        ZY4
  2015           1,310,000         3.75            3.72             ZP3                    2025      1,525,000 †    4.25       4.35        ZZ1
  2016           1,320,000         4.00            3.80             ZQ1                    2026      1,550,000 †    4.25       4.39        A21


                                                      $5,500,000 SERIES 2006B BONDS †
                                                   Initial                                                                      Initial
                                                 Reoffering                                                                   Reoffering
 Year of         Principal         Interest       Price or        CUSIP                  Year of      Principal    Interest    Price or    CUSIP
 Maturity        Amount              Rate          Yield*         Suffix                 Maturity     Amount         Rate       Yield*     Suffix

  2007            $275,000         4.00%           3.55%           A39                     2017      $275,000       4.10 %    4.20%         B53
  2008             275,000         4.00            3.57            A47                     2018       275,000       4.125     4.25          B61
  2009             275,000         4.00            3.60            A54                     2019       275,000       5.00      4.30**        B79
  2010             275,000         4.00            3.65            A62                     2020       275,000       5.00      4.32**        B87
  2011             275,000         4.00            3.73            A70                     2021       275,000       5.00      4.35**        B95
  2012             275,000         4.00            3.83            A88                     2022       275,000       5.00      4.45**        C29
  2013             275,000         4.00            @100            A96                     2023       275,000       5.00      4.49**        C37
  2014             275,000         4.00            4.05            B20                     2024       275,000       4.50      4.60          C45
  2015             275,000         4.00            4.10            B38                     2025       275,000       4.60      4.65          C52
  2016             275,000         4.00            4.15            B46                     2026       275,000       4.60      4.68          C60
 *Initial reoffering prices or yields were obtained from the successful bidders for the Bonds.
**Priced to par call on February 1, 2016.
†See “SALE BY COMPETITIVE BIDDING” for information regarding bond insurance.




                                                            OPTIONAL REDEMPTION
          The Bonds of each series maturing on or before February 1, 2016 are not subject to redemption prior to maturity. The Bonds of
each series maturing on and after February 1, 2017 (or portions thereof in installments of $5,000) are subject to redemption at the option of
the City prior to their stated maturities, on or after February 1, 2016, in whole or in part from time to time on any date, in such order as may
be determined by the City (except that, if at any time, less than all of the Bonds of a given maturity are called for redemption, the particular
Bonds or portions thereof in installments of $5,000 of such maturity to be redeemed shall be selected by lot), at a price of par (100%)
together with the interest accrued thereon to the date fixed for the redemption thereof.

            See also “DESCRIPTION OF THE BONDS - Notice of Redemption”.
                       CITY OF ROANOKE, VIRGINIA

                                CITY COUNCIL

                          C. NELSON HARRIS, Mayor

                  BEVERLY T. FITZPATRICK, JR., Vice Mayor

                              M. RUPERT CUTLER

                             ALFRED T. DOWE, JR

                               SHERMAN P. LEA

                            BRENDA L. MCDANIEL

                              BRIAN J. WISHNEFF

                            _____________________

                  CITY COUNCIL APPOINTED OFFICIALS

                     DARLENE L. BURCHAM, City Manager

                       JESSE A. HALL, Director of Finance

                   WILLIAM M. HACKWORTH, City Attorney

                          MARY F. PARKER, City Clerk

                       DREW HARMON, Municipal Auditor

                            _____________________

         HAWKINS DELAFIELD & WOOD LLP, Bond Counsel to the City
                            67 Wall Street
                     New York, New York 10005
                           (212) 820-9300

BB&T CAPITAL MARKETS, a division of Scott & Stringfellow, Inc., Financial Advisor
                         2 South Ninth Street
                      Richmond, Virginia 23219
                            (804) 649-3937

                      FOR ADDITIONAL INFORMATION
                      Department of Finance, City of Roanoke
                       215 Church Avenue, S.W., Room 465
                            Roanoke, Virginia 24011
                                 (540) 853-2821
[This Page Intentionally Left Blank]
          The information contained in this Official Statement (which term shall be deemed to include Appendix A,
Appendix B, Appendix C, Appendix D, Appendix E and Appendix F to this Official Statement and all documents
incorporated herein by reference) has been obtained from the City and other sources deemed reliable. The
information concerning DTC has been obtained from DTC. No representation is made, however, as to the accuracy
or completeness of the information contained in this Official Statement, and nothing contained in this Official
Statement is, or shall be relied upon as, a promise or representation by the City. This Official Statement is submitted
in connection with the sale of the securities described in it and may not be reproduced or used, in whole or in part,
for any other purpose. The information contained in this Official Statement is subject to change without notice and
neither the delivery of this Official Statement nor any sale made by means of it shall, under any circumstances,
create any implication that there have not been changes in the affairs of the City since the date of this Official
Statement.
          No broker, dealer, sales representative or any other person has been authorized by the City to give any
information or to make any representation other than as contained in this Official Statement in connection with the
offering described in it and, if given or made, such other information or representation must not be relied upon as
having been authorized by the City. This Official Statement does not constitute an offer to sell or the solicitation of
an offer to buy any securities other than those described on the cover and inside cover pages, nor shall there be any
offer to sell, solicitation of an offer to buy or sale of such securities by any person in any jurisdiction in which it is
unlawful for such person to make such offer, solicitation or sale.
                                                ______________________
      THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
                                                                    TABLE OF CONTENTS
                                                                                                                                                                        Page
INTRODUCTION .........................................................................................................................................................1
DESCRIPTION OF THE BONDS ................................................................................................................................1
  Interest, Maturities and Places of Payment ...............................................................................................................1
  Book-Entry Only Bonds ...........................................................................................................................................2
  Optional Redemption ................................................................................................................................................2
  Notice of Redemption ...............................................................................................................................................2
SECURITY FOR THE BONDS....................................................................................................................................2
BONDHOLDER REMEDIES IN THE EVENT OF DEFAULT..................................................................................2
RATINGS......................................................................................................................................................................3
LITIGATION AND CONTINGENT LIABILITIES.....................................................................................................3
CERTIFICATE CONCERNING OFFICIAL STATEMENT .......................................................................................4
APPROVAL OF LEGAL MATTERS...........................................................................................................................4
TAX MATTERS ...........................................................................................................................................................4
  Opinion of Bond Counsel .........................................................................................................................................4
  Certain Ongoing Federal Tax Requirements and Covenants ....................................................................................5
  Certain Collateral Federal Tax Consequences ..........................................................................................................5
  Original Issue Discount.............................................................................................................................................5
  Bond Premium ..........................................................................................................................................................6
  Legislation ................................................................................................................................................................6
FINANCIAL ADVISOR ...............................................................................................................................................6
CONTINUING DISCLOSURE.....................................................................................................................................6
SALE BY COMPETITIVE BIDDING .........................................................................................................................7
OTHER MATTERS ......................................................................................................................................................7

Appendix A             The City of Roanoke .........................................................................................................................A-1
Appendix B             Organization Chart of City Government ...........................................................................................B-1
Appendix C             Comprehensive Annual Financial Report of the City for the Fiscal Year Ended June 30, 2005 ......C-1
Appendix D             Proposed Forms of Opinions of Bond Counsel.................................................................................D-1
Appendix E             Description of The Depository Trust Company and the Book-Entry System ................................... E-1
Appendix F             Proposed Form of Continuing Disclosure Certificate ....................................................................... F-1


                                                                                      i
[This Page Intentionally Left Blank]
                                            OFFICIAL STATEMENT

                               RELATING TO THE ORIGINAL ISSUANCE OF

                                                $35,055,000
                                       CITY OF ROANOKE, VIRGINIA,
                                       GENERAL OBLIGATION BONDS

                                                 CONSISTING OF

                 $29,555,000                                                $5,500,000
       GENERAL OBLIGATION PUBLIC                                   GENERAL OBLIGATION PUBLIC
     IMPROVEMENT BONDS, SERIES 2006A                             IMPROVEMENT BONDS, SERIES 2006B
            (Not Subject to AMT)                                         (Subject to AMT)
                                                INTRODUCTION

         The purpose of this Official Statement, which includes the cover page and the appendices hereto, is to
furnish information in connection with the sale by the City of Roanoke, Virginia (the “City”), of $29,555,000
principal amount of General Obligation Public Improvement Bonds, Series 2006A (the “Series 2006A Bonds”), and
$5,500,000 principal amount of General Obligation Public Improvement Bonds, Series 2006B (the “Series 2006B
Bonds”, and collectively with the Series 2006A Bonds, the “Bonds”). The Bonds were offered for sale via
electronic competitive bidding held via BiDCOMP/PARITY on January 26, 2006. See “SALE BY COMPETITIVE
BIDDING” herein.

         The Bonds will be issued in accordance with the Public Finance Act of 1991, Title 15.2, Chapter 26 of the
Code of Virginia, 1950. The City Council of the City adopted resolutions on June 16, 2003, March 15, 2004 and
June 20, 2005 authorizing the issuance and sale of the Bonds.

          The proceeds of the Series 2006A Bonds will be used to pay the costs of the public improvement projects
of the City set forth below. The proceeds of the Series 2006B Bonds will be used to repay certain Bond
Anticipation Notes issued on December 22, 2005 in advance of the issuance of the Series 2006B Bonds to provide
monies granted by the City to the Roanoke Redevelopment and Housing Authority (the “Authority”) for the purpose
of assisting the Authority in paying a portion of the costs of a redevelopment project in the City, known as the South
Jefferson Redevelopment Area Project or as the Riverside Centre for Research and Technology.

                 Series 2006A Bonds
                 Public Schools                                                     $14,250,000
                 Roanoke Civic Center Renovations                                     6,405,000
                 Art Museum                                                           3,700,000
                 Public Parking Facilities                                            2,600,000
                 Financial Information System Replacement                             2,600,000
                                                                                     29,555,000
                 Series 2006B Bonds
                 South Jefferson Redevelopment Area Project
                 (Riverside Centre for Research and Technology)                       5,500,000
                                                                                    $35,055,000

                                        DESCRIPTION OF THE BONDS

Interest, Maturities and Places of Payment

          The Bonds will be dated their date of delivery, bear interest from their date, payable on August 1, 2006 and
semiannually on each February 1 and August 1 thereafter, at the rates per annum set forth on the inside cover page
of this Official Statement and will mature on February 1 in each of the years and in the aggregate principal amounts
set forth on the inside cover page of this Official Statement.
Book-Entry Only Bonds

         The Bonds will be issued in fully-registered form in the denominations of $5,000 or whole multiples
thereof and will be held by The Depository Trust Company (“DTC”), or its nominee, as securities depository with
respect to the Bonds. Purchases of beneficial ownership interest in the Bonds will be made only in book-entry form
and individual purchasers will not receive physical delivery of Bond certificates. Reference is made to Appendix E
for a description of DTC and DTC’s book-entry system.

         The Registrar and Paying Agent for the Bonds will be the Director of Finance of the City.

Optional Redemption

         The Bonds are subject to redemption at the option of the City prior to their stated maturities as described on
the inside cover page of this Official Statement.

Notice of Redemption

          If any Bond of either series (or any portion of the principal amount thereof in installments of $5,000) shall
be called for redemption, notice of the redemption thereof, specifying the date, number and maturity of such Bond,
the date and place or places fixed for its redemption, the premium, if any, payable upon such redemption, and if less
than the entire principal amount of such Bond is to be redeemed, that such Bond must be surrendered in exchange
for the principal amount thereof to be redeemed and a new Bond or Bonds issued equalling in principal amount that
portion of the principal amount thereof not to be redeemed, shall be mailed not less than thirty (30) days prior to the
date fixed for redemption by first class mail, postage prepaid, to the registered owner of such Bond at his address as
it appears on the books of registry kept by the Registrar for the Bonds as of the close of business on the forty-fifth
(45th) day next preceding the date fixed for redemption. If notice of the redemption of any Bond (or portion thereof
in installments of $5,000) shall have been given as aforesaid, and payment of the principal amount of such Bond (or
the portion of the principal amount thereof to be redeemed) and of the accrued interest and premium, if any, payable
upon such redemption shall have been duly made or provided for, interest on such Bond shall cease to accrue from
and after the date so specified for the redemption thereof. So long as the Bonds are in book-entry only form, any
notice of redemption will be given only to DTC or its nominee. The City shall not be responsible for providing any
beneficial owner of the Bonds with any notice of redemption.

                                          SECURITY FOR THE BONDS

         The Bonds are general obligations of the City, and the full faith and credit of the City are irrevocably
pledged to the punctual payment of the principal of and, premium, if any, and interest on the Bonds as the same
become due. In each year while the Bonds, or any of them, remain outstanding and unpaid, the City Council is
authorized and required to assess, levy and collect, at the same time and in the same manner as other taxes in the
City are assessed, levied and collected, a tax upon all taxable property within the City, over and above all other
taxes, authorized or limited by law and without limitation as to rate or amount, sufficient to pay when due the
principal of and premium, if any, and interest on the Bonds to the extent other funds of the City are not lawfully
available and appropriated for such purpose.

                         BONDHOLDER REMEDIES IN THE EVENT OF DEFAULT

         Section 15.2-2659 of the Code of Virginia, 1950, provides that, upon the affidavit of any owner or any
paying agent of any general obligation bonds of a political subdivision of the Commonwealth of Virginia (including
the City) in default as to payment of principal, premium or interest, the Governor shall immediately make a
summary investigation and if such default is established to the Governor’s satisfaction, the Governor shall
immediately make an order directing the State Comptroller to withhold all further payment to the political
subdivision of all funds, or any part thereof, appropriated and payable by the Commonwealth to the political
subdivision so in default for any and all purposes until such default is cured. The Governor shall, while such default
continues, direct the payment of all such sums so withheld, or so much thereof as shall be necessary, to the owners
of such bonds so in default, or the paying agent therefor, so as to cure, or to cure insofar as possible, the default on


                                                         -2-
such bonds and the interest thereon. The Governor shall, as soon as practicable, give notice of such default and of
the availability of funds with the paying agent or with the State Comptroller by publication one time in a daily
newspaper of general circulation in the City of Richmond and, in the case of registered bonds, by mail, to the
registered owners of the Bonds. The State Comptroller advises that to date no order to withhold funds pursuant to
Section 15.2-2659 has ever been issued. Although the provisions of Section 15.2-2659 have never been tested in a
Virginia court, the Attorney General of Virginia has ruled that appropriated funds can be withheld by the
Commonwealth pursuant to that section. In the fiscal year ended June 30, 2005, total direct appropriations paid by
the Commonwealth to the City amounted to approximately $58 million.

          Neither the Bonds, nor the proceedings with respect thereto, specifically provide any remedies which
would be available to owners of the Bonds if the City defaults in the payment of principal of or premium, if any, or
interest on the Bonds, nor do they contain any provisions for the appointment of a trustee to enforce the interests of
the owners of the Bonds upon the occurrence of such default. Upon any default in the payment of the principal of or
premium, if any, or interest on a Bond, the owner of such Bond could, among other things, seek to obtain a writ of
mandamus from a court of competent jurisdiction requiring the City Council to assess, levy and collect an ad
valorem tax, unlimited as to rate or amount, upon all property in the City subject to taxation by the City, sufficient to
pay the principal of and premium, if any, and interest on the Bonds as the same shall come due and otherwise to
observe the covenants contained in the Bonds and the proceedings with respect thereto. The mandamus remedy,
however, may be impracticable and difficult to enforce. Further, the right to enforce payment of the principal of or
premium, if any, or interest on the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws and equitable principles, which may limit the specific enforcement of certain remedies.

          Although Virginia law currently does not authorize such action, future legislation may enable the City to
file a petition for relief under the United States Bankruptcy Code (the “Bankruptcy Code”) if it is insolvent or unable
to pay its debts. Bankruptcy proceedings by the City could have adverse effects on bondholders including (a) delay
in the enforcement of their remedies, (b) subordination of their claims to those supplying goods and services to the
City after the initiation of bankruptcy proceedings and to the administrative expenses of bankruptcy proceedings,
and (c) imposition without their consent of a reorganization plan reducing or delaying payment of the Bonds. The
Bankruptcy Code contains provisions intended to ensure that, in any reorganization plan not accepted by at least a
majority of a class of creditors such as the holders of general obligation bonds, such creditors will have the benefit
of their original claim or the “indubitable equivalent”. The effect of these and other provisions of the Bankruptcy
Code cannot be predicted and may be significantly affected by judicial interpretation.

         The City has never defaulted in the payment of either principal of or interest on any indebtedness.

                                                       RATINGS

         Fitch Ratings, Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services have assigned the
Bonds the initial ratings set forth on the cover page of this Official Statement. An explanation of the significance of
such ratings may only be obtained from the rating agency furnishing the same. The City furnished to such rating
agencies the information contained in this Official Statement and certain publicly available materials and
information about the City. Generally, rating agencies base their ratings on such materials and information, as well
as investigations, studies and assumptions of the rating agencies. Such ratings may be changed at any time, and no
assurance can be given that they will not be revised downward or withdrawn entirely by any or all such rating
agencies if, in the judgment of any or all, circumstances so warrant. Such circumstances may include, without
limitation, changes in or unavailability of information relating to the City. Any such downward revision or
withdrawal of any such ratings may have an adverse effect on the market price of the Bonds.

                                LITIGATION AND CONTINGENT LIABILITIES

         The City Attorney reports that there is no litigation pending or, to his knowledge, threatened affecting the
issuance of the Bonds or the security therefor. The City is a defendant in certain litigation arising in the ordinary
course of operations and is subject to certain contingent liabilities, including the litigation and contingent liabilities
described in Note 18 to the City’s financial statements included in Appendix C to this Official Statement. The City
Attorney has reviewed the status of such litigation and is of the opinion that foreseeable liability, if any, in all of


                                                          -3-
them would not have a material adverse effect upon the financial condition of the City. The City Attorney is also of
the opinion that such litigation will not affect the validity of the Bonds or the ability of the City to levy ad valorem
taxes for payment of the principal of, and premium, if any, and interest on the Bonds.

                           CERTIFICATE CONCERNING OFFICIAL STATEMENT

          The City will furnish to the successful bidder or bidders for the Bonds a certificate dated as of the date of
delivery of the Bonds, signed by the City Manager and the Director of Finance, stating that the descriptions and
statements contained in the Official Statement on the date of sale and on the date of delivery of the Bonds were, and
are, to the best of their knowledge, true and correct in all material respects and did not and do not contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make
the statements made, in the light of the circumstances under which they were made, not misleading. In such
certificate, the City Manager and the Director of Finance may state that they did not independently verify the
information indicated in the Official Statement as having been obtained or derived from sources other than the City
but that they have no reason to believe such information is not accurate. Such certificate will also state that from the
date bids were received for the Bonds to the date of delivery of the Bonds there has been no material adverse change
in the condition of the City (financial or otherwise) which affects the City’s ability to pay principal of, and premium,
if any, and interest on the Bonds or any other general obligation bonds of the City.

                                       APPROVAL OF LEGAL MATTERS

          Certain legal matters relating to the authorization and validity of the Bonds are subject to the approval of
Hawkins Delafield & Wood LLP, New York, New York, Bond Counsel to the City. The opinions of Bond Counsel
approving the Bonds will be furnished at the expense of the City upon delivery of the Bonds and will be printed on
the Bonds. The proposed forms of the opinions of Bond Counsel are set forth as Appendix D to this Official
Statement. Bond Counsel has not prepared this Official Statement and has not verified its accuracy, completeness or
fairness. Accordingly, Bond Counsel will express no opinion of any kind as to the Official Statement, and its
opinions will be limited to matters relating to the authorization and validity of the Bonds and to the exclusion of
interest on the Bonds from gross income for purposes of federal and Virginia income taxation as described herein.

                                                   TAX MATTERS

Opinion of Bond Counsel

          In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the City, New York, New York, under
existing statutes and court decisions and assuming continuing compliance with certain tax covenants described
herein, (i) interest on the Bonds is excluded from gross income for federal income tax purposes pursuant to Section
103 of the Internal Revenue Code of 1986 (the “Code”), except that no opinion is expressed as to such exclusion of
interest on any Series 2006B Bond for any period during which such Series 2006B Bond is held by a person who,
within the meaning of Section 147(a) of the Code, is a “substantial user” of the facilities financed with the proceeds
of the Series 2006B Bonds or a “related person”, (ii) interest on the Series 2006A Bonds is not treated as a
preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code;
such interest, however, is included in the adjusted current earnings of certain corporations for purposes of
calculating the alternative minimum tax imposed on such corporations, and (iii) interest on the Series 2006B
Bonds is treated as a preference item in calculating the alternative minimum tax imposed on individuals and
corporations under the Code. In rendering its opinion, Bond Counsel has relied on certain representations,
certifications of fact, and statements of reasonable expectations made by the City and the Authority in connection
with the Bonds, and Bond Counsel has assumed compliance by the City and the Authority with certain ongoing
covenants to comply with applicable requirements of the Code to assume the exclusion of interest on the bonds from
gross income under Section 103 of the Code.

         In addition, in the opinion of Bond Counsel to the City, under the existing statutes of the Commonwealth of
Virginia, interest on the Bonds is not includable in computing the Virginia income tax.




                                                          -4-
          Bond Counsel expresses no opinion regarding any other federal or State tax consequences with respect to
the Bonds. Bond Counsel renders its opinion under existing statutes and court decisions as of the issue date, and
assumes no obligation to update its opinion after the issue date to reflect any future action, fact or circumstance, or
change in law or interpretation or otherwise. Bond Counsel expresses no opinion on the effect of any action
hereafter taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross income for
federal income tax purposes of interest on the Bonds or under State and local tax law.

Certain Ongoing Federal Tax Requirements and Covenants

         The Code establishes certain ongoing requirements that must be met subsequent to the issuance and
delivery of the Bonds in order that interest on the Bonds be and remain excluded from gross income under Section
103 of the Code. These requirements include, but are not limited to, requirements relating to use and expenditure of
gross proceeds of the Bonds, yield and other restrictions on investments of gross proceeds and the arbitrage rebate
requirement that certain excess earnings on gross proceeds be rebated to the federal government. Noncompliance
with such requirements may cause interest on the Bonds to become included in gross income for federal income tax
purposes retroactive to their issue date, irrespective of the date on which such noncompliance occurs or is
discovered. The City and the Authority have covenanted to comply with certain applicable requirements of the
Code to assure the exclusion of interest on the Bonds from gross income under Section 103 of the Code.

Certain Collateral Federal Tax Consequences

         The following is a brief discussion of certain collateral federal income tax matters with respect to the
Bonds. It does not purport to address all aspects of federal taxation that may be relevant to a particular owner of a
Bond. Prospective investors, particularly those who may be subject to special rules, are advised to consult their own
tax advisors regarding the federal tax consequences of owning and disposing of the Bonds.

          Prospective owners of the Bonds should be aware that the ownership of such obligations may result in
collateral federal income tax consequences to various categories of persons, such as corporations (including S
corporations and foreign corporations), financial institutions, property and casualty and life insurance companies,
individual recipients of Social Security and railroad retirement benefits, individuals otherwise eligible for the earned
income tax credit and taxpayers deemed to have incurred or continued indebtedness to purchase or carry obligations
the interest on which is not included in gross income for federal income tax purposes. Interest on the Bonds may be
taken into account in determining the tax liability of foreign corporations subject to the branch profits tax imposed
by Section 884 of the Code.

Original Issue Discount

         “Original issue discount” (“OID”) is the excess of the sum of all amounts payable at the stated maturity of a
Bond (excluding certain “qualified stated interest” that is unconditionally payable at least annually at prescribed
rates) over the issue price of that maturity. In general, the “issue price” of a maturity means the first price at which a
substantial amount of the Bonds of that maturity was sold (excluding sales to bond houses, brokers, or similar
persons acting in the capacity as underwriters, placement agents, or wholesalers). In general, the issue price for each
maturity of Bonds is expected to be the initial public offering price set forth on the cover page of this Official
Statement. Bond Counsel further is of the opinion that, for any Bonds having OID (a “Discount Bond”), OID that
has accrued and is properly allocable to the owners of the Discount Bonds under Section 1288 of the Code is
excludable from gross income for federal income tax purposes to the same extent as other interest on the Bonds.

         In general, under Section 1288 of the Code, OID on a Discount Bond accrues under a constant yield
method, based on periodic compounding of interest over prescribed accrual periods using a compounding rate
determined by reference to the yield on that Discount Bond. An owner’s adjusted basis in a Discount Bond is
increased by accrued OID for purposes of determining gain or loss on sale, exchange or other disposition of such
Bond. Accrued OID may be taken into account as an increase in the amount of tax-exempt income received or
deemed to have been received for purposes of determining various other tax consequences of owning a Discount
Bond even though there will not be a corresponding cash payment.




                                                          -5-
         Owners of Discount Bonds should consult their own tax advisors with respect to the treatment OID for
federal income tax purposes, including various special rules relating thereto, and the State and local tax
consequences of acquiring, holding and disposing of Discount Bonds.

Bond Premium

          In general, if an owner acquires a Bond for a purchase price (excluding accrued interest) or otherwise at a
tax basis that reflects a premium over the sum of all amounts payable on the Bond after the acquisition date
(excluding certain “qualified stated interest” that is unconditionally payable at least annually at prescribed rates),
that premium constitutes “bond premium” on that Bond (a “Premium Bond”). In general, under Section 171 of the
Code, an owner of a Premium Bond must amortize the bond premium over the remaining term of the Premium
Bond, based on the owner’s yield over the remaining term of the Premium Bond, determined based on constant yield
principles (in certain cases involving a Premium Bond callable prior to its stated maturity date, the amortization
period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield
on such Premium Bond). An owner of a Premium Bond must amortize the bond premium by offsetting the qualified
stated interest allocable to each interest accrual period under the owner’s regular method of accounting against the
bond premium allocable to that period. In the case of a tax-exempt Premium Bond, if the bond premium allocable to
an accrual period exceeds the qualified stated interest allocable to that accrual period, the excess is a nondeductible
loss. Under certain circumstances, the owner of a Premium Bond may realize a taxable gain upon disposition of the
Premium Bond even though it is sold or redeemed for an amount less than or equal to the owner’s original
acquisition cost. Owners of any Premium Bonds should consult their own tax advisors regarding the treatment of
bond premium for federal income tax purposes, including various special rules relating thereto, and State and local
tax consequences, in connection with the acquisition, ownership, amortization of bond premium on sale, exchange
or other disposition of Premium Bonds.

Legislation

         Legislation affecting municipal bonds is regularly under consideration by the United States Congress.
There can be no assurance that legislation enacted or proposed after the date of issuance of the Bonds will not have
an adverse effect on the tax-exempt status or market price of the Bonds.

                                               FINANCIAL ADVISOR

         BB&T Capital Markets, a division of Scott & Stringfellow, Inc., Richmond, Virginia, is employed as
financial advisor to the City of Roanoke in connection with the issuance of the Bonds and will not submit a bid to
purchase the Bonds from the City at its competitive sale.

                                           CONTINUING DISCLOSURE

         The City will execute and deliver to the purchasers of Bonds a Continuing Disclosure Certificate, the form
of which is set forth as Appendix F to this Official Statement, pursuant to which the City will covenant and agree,
for the benefit of the holders of the Bonds, consistent with Rule 15c2-12 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, to provide: annual financial information and
operating data for the City (“Annual Reports”), including, if available, audited financial statements of the City for
each fiscal year beginning with the fiscal year beginning July 1, 2005; in a timely manner, notices of certain events
with respect to the Bonds, if material, including (i) principal and interest payment delinquencies, (ii) non-payment
related defaults, (iii) unscheduled draws on debt service reserves reflecting financial difficulties, (iv) unscheduled
draws on credit enhancements reflecting financial difficulties, (v) substitution of credit or liquidity providers or their
failure to perform, (vi) adverse tax opinions or events affecting the tax-exempt status of the Bonds, (vii)
modifications to rights of Bondholders, (viii) certain bond calls, (ix) defeasances, (x) release, substitution or sale of
property securing repayment of the Bonds and (xi) rating changes; and notice of any failure of the City to provide
required annual financial information referred to above will be provided to each Nationally Recognized Municipal
Securities Information Repository (a “NRMSIR”) and the appropriate Virginia State information depository, if any.
As of the date of this Official Statement, the following NRMSIRs have been approved by the SEC: Bloomberg
Municipal Repository, DPC Data Inc., FT Interactive Data and Standard & Poor’s Securities Evaluations, Inc.; no


                                                          -6-
Virginia State information depository has been designated for the Commonwealth of Virginia. The Event Notices of
certain events referred to above will be provided to each NRMSIR, to the Municipal Securities Rulemaking Board
and to the appropriate Virginia State information depository, if any. An updated list of NRMSIRs may be obtained
from the Securities and Exchange Commission (www.sec.gov). Alternatively to filing the Annual Reports and
Event Notices with the NRMSIRs and any Virginia State information repository, the City may make such filings
with DisclosureUSA. The continuing obligation of the City to provide Annual Reports and Event Notices referred
to above will terminate with respect to the Bonds when the Bonds are no longer outstanding. Any failure by the
City to comply with the foregoing will not constitute a default with respect to the Bonds. In the Continuing
Disclosure Certificate, the City represents that, in the five previous years, it has not failed to comply in any material
respect with any previous undertaking in a written contract or agreement specified in paragraph (b)(5)(i) of Rule
15c2-12.

                                       SALE BY COMPETITIVE BIDDING

          The Bonds were awarded pursuant to electronic competitive bidding held via PARITY on January 26,
2006. The Series 2006A Bonds were awarded to a group of underwriters led by Wachovia Bank, National
Association (the “Series 2006A Underwriter”), at a price to the City that results in an underwriters’ discount of
$176,738.90 from the initial public offering prices derived from the yields shown on the inside cover page. The
Series 2006B Bonds were awarded to a group of underwriters led by UBS Securities LLC (the “Series 2006B
Underwriter”, and collectively with the Series 2006A Underwriter, the “Underwriters”) at a price to the City that
results in an underwriters’ discount of $64,075 from the initial public offering prices derived from the yields shown
on the inside cover page. The Underwriters supplied the information as to the initial public offering yields shown
on the inside cover page. The Underwriters may offer to sell the Bonds to certain dealers and others at prices lower
than the initial public offering prices, or prices derived from the yields, shown on the inside cover page.

         The Underwriters have advised the City that the Underwriters have obtained commitments for private
commercial bond insurance for the 2017 through 2026 maturities of the Series 2006A Bonds, and all of the
maturities of the Series 2006B Bonds, respectively. The premiums for this insurance are to be paid by the
Underwriters from their compensation, respectively. Prospective investors should contact the applicable
Underwriter for information concerning any such municipal bond insurance.

                                                 OTHER MATTERS

         The City Council has by resolution authorized the distribution of this Official Statement. The City has
deemed this Official Statement final as of this date within the meaning of Rule 15c2-12 of the Securities and
Exchange Commission, except for the omission of certain pricing and other information permitted to be omitted
pursuant to Rule 15c2-12.

         The references, excerpts and summaries of all documents referred to herein do not purport to be complete
statements of the provisions of such documents, and reference is directed to all such documents for full and
complete statements of all matters of fact relating to the Bonds, the security for the payment of the Bonds and the
rights and obligations of the holders thereof.

        Additional information and copies of the City’s published financial statements and budgetary documents
may be obtained upon request to the office of Director of Finance, City of Roanoke, 215 Church Avenue, Room
465, Roanoke, Virginia, 24011, telephone (540) 853-2821, or from the City’s financial advisor, BB&T Capital
Markets, a division of Scott & Stringfellow, Inc., 2 South Ninth Street, Richmond, Virginia 23219, telephone (804)
649-3932.

                                                                          THE CITY OF ROANOKE, VIRGINIA

                                                                          /s/   C. NELSON HARRIS

                                                                          By: C. NELSON HARRIS
                                                                          Title: Mayor


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                                                                                                         APPENDIX A

                                             THE CITY OF ROANOKE

General

          Roanoke, the largest city in the Commonwealth of Virginia west of Richmond, is located at the southern
end of the Shenandoah Valley, approximately 170 miles west of Richmond, 235 miles southwest of Washington,
D.C. and 250 miles west of Norfolk. This position in the Southeast gives Roanoke ready access to nearly two-thirds
of the total population of the United States, all within a 500-mile radius. Lying at the region’s crossroads of major
rail and highway systems, the City serves as the principal trade, industrial, transportation, medical and cultural
center of western Virginia.

         Chartered as a city in 1884, Roanoke encompasses a land area of approximately 43 square miles. The
City’s population of approximately 92,600 represents more than 30% of the population in its metropolitan area,
which includes the neighboring City of Salem, the Town of Vinton and the Counties of Roanoke, Botetourt, Craig
and Franklin.

Government

         The City operates under the Council-Manager form of government. The City Council formulates policies
for the administration of the City. It is comprised of seven members elected on an at-large basis to serve staggered
four-year terms. Officers of the City Council are the Mayor, elected directly by the voters to a four-year term, and a
Vice Mayor who is selected on the basis of the highest popular vote in council elections and serves a two-year term.

         The City Council appoints the City Manager to serve as the City’s chief administrative officer. The City
Council also appoints the Director of Finance, the City Attorney, the City Clerk and the Municipal Auditor, each of
whom reports directly to the City Council. The City Manager is responsible for implementing the policies of the
City Council, directing business and administrative procedures and appointing departmental officials and certain
other City employees. The City Manager is aided by two Assistant City Managers. An organizational chart of the
Roanoke government is included as Appendix B to this Official Statement.

         The operation of the public school system in Roanoke is the responsibility of the City School Board (the
“School Board”). The City Council appoints the seven members of the School Board to serve staggered three-year
terms. The Superintendent of Schools is appointed by the School Board. Local funding for operating public schools
in the City is provided by an appropriation from the City’s General Fund to the School Board. The School Board,
however, is an autonomous policy-making body in matters governing education and therefore independent of the
City Council.

         The City Treasurer and the Commissioner of the Revenue are local constitutional officers of the
Commonwealth, elected by the residents of Roanoke. The City Treasurer is responsible for the collection of and
accountability for all monies payable to the City. The Commissioner of the Revenue prepares the levy of real estate,
public service, business, professional and occupational licenses and personal property taxes as well as processes City
residents’ Virginia income tax returns. The Sheriff, the Commonwealth’s Attorney and the Clerk of the Circuit
Court are also local constitutional officers elected by City residents. All constitutional officers serve four-year terms
except the Clerk of Circuit Court who serves an eight-year term.

Awards and Recognition

          The City continues to receive positive national publicity for the quality of life enjoyed by it citizens and
potential business prospects. In January 2005, Expansion Management magazine again named Roanoke one of the
50 “hottest cities” for manufacturing companies in the US. Business climate, work force quality, operating costs,
and incentive programs were some of the considerations for this award. Roanoke was also recognized as being the
best city in the nation within its class in using technology to serve it citizens by the Center for Digital Government in

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its 2005 Digital Cities Survey. Roanoke Citizen magazine has received first-place awards in national competition
for its presentation style and communication of issues to citizens. Expansion Management magazine’s July 2004
edition ranked Roanoke 40th in its Second Annual Mayor’s Challenge. Excellence in public education, college-
educated work force, health care costs and availability, quality of life, logistics infrastructure and government taxes
were considered in the Challenge. Roanoke received the International City Managers’ Association 2005 Program
Excellence Award for Innovations in Local Government Management for its innovative approach in managing the
rising cost of health care. In April 2004, Partners for Livable Communities, a national non-profit organization,
selected Roanoke as one of 30 localities in the United States to be honored as one of America’s Most Livable
Communities. In 2004, Roanoke was ranked the 11th best city in the United States by the annually updated
publication, “Cities Ranked and Rated”.

          The National Civic League recognized the City of Roanoke as an All-America City in 1996, 1988, 1982,
1979 and 1952. Roanoke shares the distinction of winning this award five times with only two other cities. The All-
America City award is a community evaluation process of citizen action and problem solving techniques, which
emphasizes citizen participation in local government. Roanoke has also received numerous awards and recognition
for its innovative programs by the Virginia Municipal League.

         “Southeast … By Design,” the City’s pilot project to renovate its neighborhoods, was selected as a winning
project for the Virginia Municipal League 2004 Achievement Awards Competition for localities with populations of
more than 90,000. “Southeast … By Design” initiatives include planning, community involvement and outreach,
housing, public safety and community services, traffic calming/gateway improvement and commercial façade
improvements.

Roanoke City Council Vision Statement

        The Roanoke City Council is committed to making Roanoke a community of excellence. The City
Council, in conjunction with the City administration and Roanoke citizens, has adopted the following vision
statement:

         Roanoke, “The Star City”, appreciating its past and planning for a shining future, will be a community of
excellence, providing an outstanding quality of life through educational, economic and cultural opportunities for all
people who live, work and visit here.

         Effective Government
         Roanoke City government will be a leading force in shaping and achieving the future of our community.
         We will be participatory, responsive and efficient, valuing diverse community involvement, public/private
         partnerships and regional cooperation. Citizens will be involved in the establishment of community
         priorities. Our facilitative government will bring together all available resources to meet the challenges of
         the 21st century.

         Economy
         Roanoke, with its vibrant downtown, will be a dynamic, diversified regional center of commerce and
         tourism, competing effectively in the global economy. To enhance economic opportunities, we will
         promote regional cooperation, nurture growth in existing business and recruit attractive new business and
         industry. Roanoke will be a destination for people seeking a unique combination of scenic, cultural and
         recreational attractions.

         Education
         Roanoke will be a “learning” community, providing the necessary educational resources and opportunities
         for all persons to develop to their maximum potentials. Through community involvement and the latest
         technology, we will provide quality public education. We will strengthen our cooperation with area
         colleges and universities and expand continuing education to promote an environment of life-long learning.

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        Quality of Life
        Roanoke will be a community where every person and every family is important and respected. We will be
        a community of stable, safe, healthy, caring and friendly neighborhoods. We will protect our natural
        environment and promote cultural, social, economic and recreational opportunities that encourage present
        and future generations to choose Roanoke as their home.

City Administrative Officials

          Darlene L. Burcham, 61, City Manager, joined the City in January 2000. Prior to being appointed City
Manager, she served the City of Norfolk as Director of Human Services from 1987–1989, as Assistant City Manager
from 1989–1995, and as Deputy City Manager from 1995–1999. Before her arrival in Norfolk, Ms. Burcham served
for eight years as Assistant County Administrator and Acting County Administrator in James City County, Virginia,
serving for eight years before that as Director of Social Services for the City of Hampton, Virginia. Ms. Burcham
has been involved in numerous committees, programs and initiatives throughout the Commonwealth of Virginia,
earning many distinctions along the way. She currently serves on the boards of the Roanoke Valley Convention and
Visitors’ Bureau, the Roanoke Valley Regional Commission, and the United Way. She also serves on the Regional
Partnership Executive Committee and is a member of the International City Management Association (ICMA) and
the Virginia Local Government Management Association. The Governor selected her to serve on the Urban Policy
Task Force and on the Virginia Citizen-Soldier Support Council. She is the Vice Chairman of the Board of the
Virginia Innovations Group and serves as a board member of the national Innovations Group. She is a member of
the Executive Committee of the Virginia First Cities Coalition. She also serves on the Board of Directors of the
Western Virginia Water Authority. She holds a Bachelor’s degree in Psychology from the College of William &
Mary, a Master’s degree in Social Work Administration from Virginia Commonwealth University and a certificate
from Harvard University’s John F. Kennedy School of Government. In 2003, Ms. Burcham received her Certified
Manager designation from the International City Management Association. She was named one of “Government
Technology” magazine’s Top 25: Doers, Dreamers and Drivers for 2004.

          Rolanda B. Russell, 52, has served the City as Assistant City Manager for Community Development since
May 2001. Prior to this, she was Deputy City Manager for the City of Decatur, Illinois. Ms. Russell received her
Bachelor of Education from Southern Illinois University (1977). She also has certifications from Senior Executive
Institute, University of Virginia (2003), Harvard University’s John F. Kennedy School of Government (1999),
Development Training Institute (1995) and the National Development Council (1991). She has been awarded the
Women of Excellence Award for Outstanding Women in Government and the Athena Award from the Chamber of
Commerce. In addition, she is an honoree for the 2006 Roanoke Chapter of Southern Christian Leadership
Conference (SCLC).

          James Grigsby, 60 was appointed in July 2005 to serve as Acting Assistant City Manager for Operations.
Prior to this appointment, he was the Fire-EMS Chief for the City of Roanoke and had served in that capacity since
October 1995. Prior to joining the City, he was Deputy Chief of Public Safety for the City of Kalamazoo, Michigan
(1988 to 1995) and Fire Chief for the City of Lee’s Summit, Missouri (1983 to 1987). He holds a Bachelor of Arts
degree from Upper Iowa University (1976), a Masters of Public Administration degree from Golden Gate University
(1978), and two associate’s degrees, one in Fire Science and one in Law Enforcement. He is a certified Executive
Fire Officer from the National Fire Academy and is a nationally accredited Chief Fire Officer. He also certified by
the Police Executive Research Forum through Harvard University. He serves on the State Fire Chiefs’ Board of
Directors and is a former board member of the local American Red Cross and the To the Rescue Museum. Mr.
Grigsby is a member of the International Association of Fire Chiefs, National Fire Protection Association, and the
Virginia State Fire Chiefs’ Association.

         Jesse A. Hall, 58, Director of Finance, was employed by the City in 1975. Prior to becoming Director of
Finance in February 2002, Mr. Hall served as Deputy Director of Finance for nine years, Administrator of City
Accounting Services for thirteen years, Assistant Municipal Auditor for two years and an Internal Auditor for three
years. Mr. Hall, a Certified Public Accountant, received a Bachelor of Science degree in Accounting and a Master’s
degree in Business Administration from Virginia Polytechnic Institute and State University. He is a member of the


                                                       A-3
American Institute of Certified Public Accountants, the Virginia Society of Certified Public Accountants and the
Government Finance Officers Association. Mr. Hall is past President of the Virginia Government Finance Officers
Association. Mr. Hall also serves as a Commissioner and Vice Chair on the Roanoke Valley Detention Commission
and as Secretary/Treasurer for the City of Roanoke Pension Plan. He also serves on the Virginia Municipal
League’s Finance Policy Committee. In addition, Mr. Hall has served on the Board of Directors of the Roanoke
Valley Federal Credit Union and the Roanoke Chapter of the Virginia Society of Certified Public Accountants.

          William M. Hackworth, 57, has been City Attorney since July 1999. Prior to his appointment as City
Attorney, Mr. Hackworth served as County Attorney for York County, Virginia, for over ten years. Prior to that, he
served as a law clerk to the Honorable Ted Dalton, Judge, United States District Court for the Western District of
Virginia (1973–1974), and as a trial attorney with the United States Department of Justice (1975–1977). He also
served as an Assistant City Attorney for the City of Roanoke (1978–1988). He holds a Bachelor of Arts degree in
Political Science from The Ohio State University (1970), a Juris Doctorate degree from the University of Virginia
Law School (1973) and a Masters in Public Administration from the University of Virginia (1981). Mr. Hackworth
was admitted to the Virginia State Bar in 1973 and is admitted to practice before the Supreme Court of the United
States, the Supreme Court of Virginia, the United States Court of Appeals for the Fourth Circuit and the United
States District Courts for the Eastern and Western Districts of Virginia. He is past President of the Local
Government Attorneys of Virginia, past President of the York–Poquoson Bar Association, and a past member of the
Board of the Roanoke Bar Association. Mr. Hackworth is a member of the Section on State and Local Government
Law of the American Bar Association, Local Government Attorneys of Virginia, General Laws Policy Committee of
the Virginia Municipal League and the International Municipal Lawyers Association. He is also a member of the
Boards of Virginia Western Community College and the Historical Society of Western Virginia. He has authored
various articles on municipal law issues.

         Ann H. Shawver, 38, Deputy Director of Finance, joined the City in 1994. Prior to becoming the Deputy
Director of Finance, she served as Manager of Accounting Services for four years and Financial Systems
Accountant for three years. Prior to joining the City, she was employed by KPMG LLP for approximately four
years. Mrs. Shawver, a Certified Public Accountant, received a Bachelor of Business Administration from James
Madison University (1989). She is a member of the American Institute of Certified Public Accountants, the Virginia
Society of Certified Public Accountants, the Government Finance Officers Association and the Virginia
Government Finance Officers Association (VGFOA). Mrs. Shawver is a member of the Executive Board of the
VGFOA and has served on several of its committees. She also served on the Board of Directors for the Roanoke
Chapter of the Virginia Society of Certified Public Accountants for three years. She is one of Roanoke’s
representatives on the Regional Advisory Board of the Roanoke Valley SPCA and she served this Board as Chair
from 2003 to 2005. Mrs. Shawver is also involved in a number of other community and volunteer activities.

         Sherman M. Stovall, 46, Director of Management and Budget, has been employed by the City since 1994,
serving in the positions of Grants Monitor, Budget/Management Analyst, Planning and Support Services Supervisor,
and Budget Administrator. Mr. Stovall received his Bachelor of Arts degree in Management from Virginia
Wesleyan College and a Master of Business Administration Degree from Marshall University. Mr. Stovall is active
in the community, serving as the Vice-Chairman of the Board of Trustees for the Pilgrim Baptist Church.

Governmental Services Provided by Roanoke

         Roanoke provides a wide variety of governmental services to its residents. For budgetary purposes, the
City organizes these services into the major program classifications discussed below.

Public Education

         A seven-member School Board, the members of which are appointed by City Council, directs the Roanoke
City Public School system. The School Board is reported as a discretely presented component unit in the City’s
comprehensive annual financial report. The General Fund provides approximately 44% of the funding required to
operate the school system, state monies provide 53%, and federal and other monies provide 3%. The School Board
is responsible for the presentation of an annual budget request to the City Manager. The School Board is not

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empowered to levy taxes or incur indebtedness; therefore, public school capital facilities are provided by capital
appropriations from the General Fund and School Fund, the issuance of general obligation bonds by the City,
Commonwealth of Virginia Literary Fund loans, Virginia Public School Authority bond funds, and Qualified Zone
Academy Bonds.

        Roanoke City Public Schools, a progressive urban school division, serves approximately 12,712 students in
kindergarten through 12th grade. Including regional and preschool students, the number of students increases to
approximately 13,360. The Roanoke Schools are one of only three in the nation offering the International
Baccalaureate program at all three school levels: elementary, middle and high school. The school system is
committed to personalizing education so all children are provided with a quality education and the proper
environment in which to learn.

          The School Board operates twenty-one elementary, six middle, two high schools, and three alternative
schools. Fifteen of the twenty-nine schools are fully accredited. Major renovations have been made to many of the
schools in recent years. Both high schools are being replaced with an expected completion date on the first one in
January 2006 and the second high school should be replaced within the next four years. The School Board employs
1,187 instructional personnel including nineteen nationally Board Certified Teachers. The overall student-teacher
ratio is approximately 18 to 1, and the primary grade ratio is 16 to 1.

         Student enrollment statistics for recent years are as follows:

                                    School Year                    Number of Students*

                                       1995-96                            13,127
                                       1996-97                            13,215
                                       1997-98                            13,231
                                       1998-99                            13,200
                                       1999-00                            13,175
                                       2000-01                            13,251
                                       2001-02                            13,263
                                       2002-03                            13,004
                                       2003-04                            12,861
                                       2004-05                            12,712
____________
*Excludes pre-school enrollment.


         In addition to the regular curriculum, a wide spectrum of programs is available to provide students with
special assistance and academic challenge.

         •        Approximately 50 distinct instructional programs are provided including a regional program for
                  265 gifted high school students in science and technology, a regional program for 200 alternative
                  education students with non-traditional learning needs and a regional program for 225 special
                  education students with disabilities requiring unique instructional techniques. The district offers
                  40 preschool classes for three and four-year-old children.

         •        Programs for the academically talented, such as Pupils Learning Appropriately Together (PLATO)
                  at the elementary level, and City School, a downtown storefront school for 65 seniors emphasizing
                  liberal arts education at the secondary level, provide the extra incentive needed to motivate
                  students with exceptional ability. The Center for the Humanities, an integrated curriculum,
                  combines history and language arts for 9th-11th graders.

         •        The Magnet School of the Visual and Performing Arts enables students to pursue concentrated
                  training in dance, instrumental music, vocal music, theatre arts, photography and visual arts.

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         •        The Magnet School Center for High Technology provides senior high school students with the
                  opportunity to study the world of high technology and aviation using state-of-the-art equipment
                  and techniques.

         •        The Magnet School for Aerospace Technology offers students the challenge of science,
                  technology, and mathematics programs tied to the theme of space exploration.

         •        The Roanoke Valley Governor’s School for Science and Technology is a regional center for the
                  study of science, mathematics and computer applications. It provides a challenging and distinctive
                  curriculum for highly motivated, college-bound students.

          The City’s educational cost per pupil of $10,014 for FY2004-05 is close to the State average and similar to
other urban areas in the Commonwealth. Teacher salaries in Roanoke are competitive with other urban localities in
the State and region.

          Eighteen institutions of higher learning, enrolling over 66,000 students, are located within a 60-mile radius
of Roanoke. Virginia Tech, which is located in Blacksburg, 35 miles from Roanoke, is a major educational
institution with 25,000 students. Its College of Engineering is one of the largest in the nation and produces highly
sought-after graduates. Other institutions within close proximity include Hollins University, Radford University,
Roanoke College and Virginia Western Community College.

         The Higher Education Center is located in the downtown area and was established for the purpose of
expanding access to higher education by providing undergraduate, graduate and professional programs. A variety of
curricula is offered by its 16 participating academic and training institutions.

Public Safety

         The City provides programs and activities designed to safeguard the life and property of its residents and
visitors. Included among these programs are law enforcement, fire services, emergency medical services,
communications and emergency preparedness.

         The Police Department is dedicated to providing efficient and effective law enforcement services. The
department has an authorized full-time staff of 250 sworn officers and 60 civilian employees. The Department has a
history and reputation of being one of the finest departments in the country and has displayed its “badge of
professionalism” by achieving national accreditation from the Commission on Accreditation for Law Enforcement
(CALEA) in July 1994. The Department has been re-accredited three times, most recently in July 2005. Fewer than
5% of the law enforcement agencies throughout the country are accredited.

          The Roanoke Police Department maintains an aggressive community policing philosophy. The Police
Department began active participation with community policing with the formation of the Community Oriented
Police Effort (COPE) Unit in 1991. The community policing philosophy involves a greater degree of community
involvement than traditional policing. This effort expanded in the summer of 2004 with the implementation of
geographic policing, in which specific officers and supervisors are directly accountable for police problem-solving
in specific areas of the City. Officers participate with individuals, community groups and other agencies to enhance
community safety. The mounted patrol and the bicycle patrol have increased the presence and involvement of the
police beyond traditional activities.

          One of the most visible aspects of the Department’s community policing efforts was the opening of three
satellite offices in the community. The offices, which are located in the Southeast, Northeast and Northwest areas of
the City, are an excellent example of partnerships with the community. These satellite offices allow officers to be
more visible in the communities they police and foster open working relationships between citizens and officers.
Another community policing initiative is the take home car program, which involves 24 vehicles. Selected officers
are authorized to drive their patrol cars home on a regular basis. The program was designed to increase visibility
and availability of uniformed police personnel within the City of Roanoke. The Department also extended the

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services of the Mounted Patrol Unit into the City’s residential areas to foster better interaction between police and
residents.

          The Roanoke Police Department moved into a new police station at 348 Campbell Avenue, S.W., in
September 2001. The new structure is only Phase I of the Department’s expansion plan and is about half the space
which will be occupied at the time the expansion is completed. The Phase II expansion of the Police Building,
currently under construction, includes facilities for police administration, the crime laboratory and other departments
still using the current police building annex. With a construction budget of $5.01 million, Phase II is expected to be
completed very early in 2006.

         The City of Roanoke was first named a Certified Crime Prevention Community by the Department of
Criminal Justice Services during Fiscal Year 2001, and has maintained this status ever since. The program
encourages localities to develop and implement collaborative community safety plans. To obtain this certification,
the City had to meet 12 core elements relating to different types of services that are available to citizens and
businesses of the City. Roanoke was one of only two jurisdictions in Virginia to receive this prestigious award. In
April 2004, Roanoke’s Citizen Police Academy was named 2004 Agency of the Year by the National Citizen Police
Academy Association. The academy is a 12-week course offered twice a year at no charge to citizens ages 21 and
older. Due to an overwhelming response and support from citizens, the Department has implemented an Advanced
Citizen Police Academy and a Senior Citizen Police Academy.

         Roanoke Fire-EMS is a full-service fire and emergency medical service agency providing basic and
advanced pre-hospital life support, fire prevention and education programs, fire suppression services, arson
detection, vehicle extrication and tactical heavy rescue. It also supports a regional hazardous materials team. In
addition to housing firefighting and EMS personnel and apparatus, fire-EMS stations are neighborhood resources.
Fire-EMS personnel at these sites help distribute important City documents, teach children about fire safety and
provide a safe place for lost children and adults.

         Firefighter/EMTs operate out of thirteen stations, seven days a week, twenty-four hours a day, with sixteen
pieces of front-line fire apparatus, seven front-line EMS units, one medium-squad and one HazMat unit. Recently,
construction began on a new fire station and administrative building on the corner of Elm Avenue and Franklin
Road. Roanoke Fire-EMS answers approximately 4,500 fire and 19,000 EMS runs annually.

         Roanoke Fire-EMS holds a Class 2 rating from the Insurance Service Organization, the highest rating given
to a Virginia fire department, and one of only five such ratings awarded in the State. This rating helps the
community by bringing lower insurance rates to homeowners and businesses. In August 2002, the department
earned its national accreditation from the Commission on Fire Accreditation International. Being named a
nationally accredited agency in 2002 changed both its status in the community and the nation, as Roanoke Fire-EMS
is one of only four fire departments in the State to hold this distinguished status. With this accreditation, the City of
Roanoke became the only city in the nation to operate nationally accredited Sheriff, Police and Fire-EMS services.

         The E911 Center provides Enhanced 911 (E911) service 24 hours a day for wireline and wireless 911 calls.
The City is currently working on implementing enhanced wireless 911 which will assist the dispatchers to locate the
caller within 125 meters. The Emergency E911 Center is equipped with a Computer Aided Dispatch (CAD) System
with mapping capability to assist with identifying the location of wireless callers. Upon a medical emergency, the
dispatcher can provide basic medical information while sending the appropriate public safety personnel.
Approximately 295,000 emergency calls are received and processed each year.

         The City of Roanoke, Roanoke County, and Town of Vinton currently have a Regional 800 MHz Trunking
Voice Radio System to serve these jurisdictions and the State Police. Mutual aid channels enable communication
and coordination between jurisdictions whenever mutual aid response is needed when transporting medical patients
or prisoners. The City has an Automated Public Safety System which is comprised of a CAD System, a Police
Records Management System (RMS), a wireless Regional Mobile Computing system, a Jail Management System
(JMS) and a Fire/EMS Records Management system. This integrated Public Safety System will further enhance the
efficiency and effectiveness of all public safety services.

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          The Telecommunications Division of the Department of Technology is responsible for the implementation,
installation and management of the City’s telephony and private radio network hardware and software. The
Telecommunications Division consists of the Radio Shop and the Telephony sections.

         The Office of Environmental and Emergency Management serves the City by ensuring all department
operations and activities are in compliance with local, State and Federal regulations. Furthermore, it is the
responsibility of this Office to plan for, and ultimately provide timely responses to emergency situations within the
City, and to assist the City’s uniformed services (Police, Fire/EMS, and Sheriff) with providing for public safety and
protection of property 24 hours per day. Additionally, training, community outreach and educational awareness for
both environmental and emergency management issues are coordinated through this office. Fostering partnerships
with local businesses and local governments in promoting the importance of sound environmental and emergency
management practices is another component of this office.

Health and Human Services

          The City provides a wide array of mandated and non-mandated human service programs to the citizens of
Roanoke. These services include a network of protective, supportive and temporary financial services that assist
citizens with achieving a realistic and attainable level of self-sufficiency. Temporary financial assistance is
provided to eligible families and individuals through such programs as Temporary Assistance to Needy Families,
Medicaid, Food Stamps, Auxiliary Grants, General Relief, State/Local Hospitalization and Energy Assistance.
Protective, preventive and supportive services are provided through such programs as Child and Adult Protective
Services, Foster Care and Adoptions, Prevention Services, Court Services, Child Care Services and Foster Care and
Adoptive Home Recruitment. Employment Services are available to assist eligible individuals in retaining,
regaining or securing employment. The Department of Human Services also administers the Regional Virginia
Institute of Social Services Training Activities (VISSTA).

          The City operates a 15-bed Juvenile Crisis Intervention Center, a 12-bed male post-dispositional juvenile
facility and an Outreach Detention Program capable of serving 24 juveniles, which also provides electronic
monitoring services. The Crisis Intervention Center and juvenile male probation facility provide counseling as well
as enhanced youth and family outreach programs.

        The Department of Human Services is responsible for administering the Comprehensive Services Act,
which provides for a collaborative system of child-centered, family-focused and community-based services and
funding to address the strengths and needs of at-risk youths and their families. The Act combined the child and
family services funding stream at the State and local level and mandated the agencies assess, plan, develop and
implement services to meet the identified needs of the community.

          The Department of Human Services includes support for the Health Department, Blue Ridge Behavioral
Healthcare, Total Action Against Poverty and the Virginia Cooperative Extension Service. The Health Department
provides health, dental and environmental services to City residents. Blue Ridge Behavioral Healthcare is the
community services board charged with providing mental health, mental retardation and substance abuse programs.
Total Action Against Poverty provides community and economic development assistance, health services, food and
nutrition services, housing and energy conservation assistance, emergency assistance and education and employment
opportunities. The Virginia Cooperative Extension Program provides residents with knowledge and skills to
improve their quality of life through educational experiences.

Parks and Recreation

         The Parks and Recreation Department is committed to improving the quality of life for the citizens and
visitors of Roanoke by providing recreational opportunities through diverse programs and facilities; promoting
environmental stewardship through beautification, management and care of public spaces; and encouraging positive
youth development through planning, collaboration and the coordination of services. The department consists of
four Divisions (Administration, Parks, Recreation and Youth Services), and consists of 77 full-time and over 200
seasonal staff members.

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          The City’s park system includes many natural assets, including the 660-acre Mill Mountain Park situated
within the corridor of the National Park Service’s Blue Ridge Parkway. This regional park serves as a gateway to
Roanoke and brings in nearly 300,000 Parkway visitors annually. Within the park lies the Discovery Center, an
award-winning interpretive center which also serves as a National Park Service Information Center, picnic facilities,
overlooks, over 10 miles of natural trail and the Mill Mountain Zoo. Additionally, Carvin’s Cove boasts a natural
setting for hiking, biking, horseback riding, kayaking, canoeing, fishing and picnicking. Roanoke has 13,000 acres
of maintained park land including 72 parks, eight community centers, four fitness centers, 53 ball fields, 60 tennis
courts, 39 playgrounds, two Olympic-sized swimming pools, three gymnasiums, a skate park and the River’s Edge
Sports Complex. Currently, there are over 50 miles of natural trail and six miles of paved greenways which are
maintained by Parks and Recreation. Approximately 25 additional miles of greenways are either in the planning
stages or under development. On August 12, 2004, the City opened its newest park, Ridgewood Park, as part of its
Parks and Recreation Master Plan.

          The Parks Division is responsible for the cleanliness and aesthetic appearance of the City’s parks. The
Athletics/Park Maintenance staff provides turf and field maintenance for parks and athletic fields. The Horticulture
section provides placement and care of hanging flower baskets in the Downtown Business District and maintenance
of approximately 90 flower beds throughout the City. The Urban Forestry section is responsible for the maintenance
of over 17,000 trees in City parks and along City streets, and plants over 800 new trees each year within parks and
other city-owned properties. Due to the City’s outstanding efforts in this area, Roanoke has been named a Tree City
USA for ten consecutive years. Additionally, staff maintains the skateboard park, playgrounds and other amenities
located within the parks. The “Adopt-a-Park” program involves the community in the care and preservation of its
park system by utilizing volunteers to help keep parks clean.

         The Recreation Division responds to the recreation needs of all ages by delivering a variety of leisure
service programs and managing recreation facilities. The Outdoor Recreation section delivers environmental
education and outdoor adventure program opportunities; the Athletics section provides for youth and adult
recreation leagues, tournaments, and camps; the Fitness and Wellness section oversees senior citizen trips and
programs, aquatic facilities and water safety, fitness centers and wellness classes; and the Neighborhoods section
operates community centers and develops programs by working with various community groups.

         The Youth Services Division provides Roanoke’s youth opportunities to learn about the functions of
government through student tours and student government days; promotes education through the focus areas of
school commitments; improves quality of life by providing for participation in the City’s youth initiative programs,
leadership training opportunities and internship programs, which encourage work ethic, diversity and employment
opportunities for future citizens; and by coordinating a summer nutrition program, encouraging healthy lifestyles for
Roanoke’s future adult citizens.

         The Parks and Recreation Department and the Police Department work together to create innovative
prevention avenues such as the Youth Summer Intern program. The efforts of these programs are specifically
targeted to the area of delinquency prevention for youth and families. The focus is to eliminate or reduce the
environmental, community or policy factors leading to involvement in the juvenile justice and/or social services
programs. Additionally, there is a public school and local government collaborative effort to provide after-school
enrichment activities for elementary age youth and their parents.

           The City operates a central library with five branches, a law library and one bookmobile. The City libraries
utilize a regional, automated system developed in cooperation with the City of Salem, Roanoke County and
Botetourt County. The City’s library provides many resources to its citizens including free internet and its largest
resource, Find it Virginia, which offers a wide range of information such as magazine and newspaper articles,
encyclopedias and other reference works, TV and radio transcripts, company information and investment reports,
health and wellness information, literary criticism, and homework help, plus photos, charts, maps, diagrams, and
illustrations. The library also hosts many activities such as Preschool Storytime, a Tuesday Night Book Club, and
an Adult Summer Reading Program.



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Public Works

           The City provides for the engineering and development of physical facilities, maintenance of existing
facilities and services to citizens. These essential functions are performed by the following:

         Engineering: The Engineering Division is in various stages of study, design and construction with many
active projects as part of the Capital Improvement Program including inspection, study, design and construction of
bridge structures, parking structures, streets, storm drains and City owned/leased buildings.

        Solid Waste Management: Once-per-week collection service is provided to 38,000 residential units and
condominium associations, nightly pickup is provided in the downtown area, and Sunday morning pickup is
provided to Market Square. A recycling program is offered to all of the City’s residential neighborhoods, schools
and small businesses with a City-wide recycling rate of approximately 40%.

          Transportation Division: The City maintains 155 signalized intersections, 57 school flashers, 26 warning
beacons and 24 miles of related interconnector cables, in addition to a municipal fire alarm system. The City
contracts with American Electric Power to install and maintain approximately 9,800 street lights. Other services
provided include pavement repair and maintenance, snow removal, structural repairs to bridges and culverts,
drainage maintenance, alley maintenance, plus curb, gutter and sidewalk construction and repair for more than 997
lane miles of streets and roads. An average of 57 lane miles of streets are resurfaced annually. Some of the recent
projects was to implement traffic calming measures and improve pedestrian safety on Grandin Road and Bullitt
Avenue which was completed at a cost of $625,000. Several streetscaping projects are planned which include
connecting Grandin Road to the Memorial Bridge’s bike lanes and parking improvements along Crystal Spring
Avenue. The number of travel lanes on Wasena Bridge will be reduced and a bike lane will be added. An ongoing
traffic calming project on Huff Lane near the school involves adding median islands and angled parking.

         Fleet Management: This department provides required service and preventive maintenance to
approximately 733 items of vehicular and motorized equipment. It also manages the motor pool program and all
vehicular equipment procurement and disposal.

Department of Housing and Neighborhood Services

         The Department of Housing and Neighborhood Services was created to be the catalyst for developing
strong neighborhoods and improving quality of life in Roanoke’s neighborhoods. The department has 20 full-time
employees who are responsible for code enforcement, housing development and neighborhood services.

         The Department’s Code Enforcement Division is responsible for the enforcement of all nuisance codes to
maintain the health, safety and welfare of Roanoke’s citizens. Specifically, staff administers the zoning ordinance,
building maintenance code, the residential rental inspection program, weeds and trash abatement, inoperable motor
vehicle ordinance and the graffiti abatement program. During the past fiscal year, staff cited 4,619 property owners
for nuisance code violations. Of that number, over 90% were abated by the City or the property owners.

         The Housing Development Division is responsible for providing a balanced, sustainable range of housing
choices in all price ranges and design options throughout the City. Specifically, this function entails targeting
federal housing and City resources to revitalize inner-city neighborhoods, promote homeownership, and develop
opportunities for “housing clusters” which offer a diversity of housing types, prices, and scale. During the past
fiscal year, the City partnered with the local housing authority and non-profit housing providers to furnish both
affordable and market-rate housing. Staff also developed various educational, marketing and outreach programs to
increase citizen awareness of the City’s existing housing programs and opportunities.

          The Neighborhood Services Division is responsible for organizing neighborhood associations into viable
entities to help sustain quality of life in their neighborhoods. Specifically, Neighborhood Services provides
technical assistance and training to neighborhood groups, manages the neighborhood development grants, creates


                                                       A-10
neighborhood watch programs, provides leadership training, and manages the Citizens Service Center. The Citizens
Service Center answers citizen information calls and manages the tracking system for complaints and requests for
City services. During the past fiscal year, the center processed over 11,000 requests for information, service
requests and complaints. Customer service issues are documented by staff through the customer relationship
management software, Respond. These issues are subsequently referred to the appropriate City departments or
divisions for handling. Currently, over half the City divisions use Respond and it is the City’s intent to have at least
one Respond work station in each department.

Enterprises

         The following facilities are operated as public enterprises:

         Transit Company: The City owns the Greater Roanoke Transit Company which provides local mass transit
bus service along 18 routes. During the year ended June 30, 2005, ridership totaled 1,923,317 passengers. For
more information on the Greater Roanoke Transit Company please see page A-22.

         Civic Facilities: Civic facilities include the Roanoke Civic Center complex and a 25,000-seat stadium.
The Roanoke Civic Center complex has an 11,000-seat arena, a newly renovated Performing Arts Theatre, which
seats approximately 2,148 people, and a 12,000-square-foot exhibition hall. It is home to the Roanoke Dazzle
National Basketball Development League team and the United Hockey League’s Roanoke Valley Vipers hockey
team. Phase I improvements to the general facility included expanded food and beverage offerings with name brand
products, enhanced services for patrons with disabilities, new roofing for the coliseum and auditorium, a new fall
protection system for the arena ceiling grid, new team room facilities as well as a new office building and training
rooms. Construction on Phase II of the renovations is underway. This phase consists of the construction of a new
45,000-square-foot building to the west of the existing Civic Center complex which will provide space for a larger
and more flexible stadium exhibition hall, new central kitchen, pre-function space and assorted storage areas. Phase
II will provide a new loading dock at the Coliseum, and also includes the conversion of the existing kitchen into
locker/dressing rooms for sports teams; provision of a prep area for concessions; construction of a new cooling
tower; “back-of-house” improvements to the auditorium (including a dimming system and repairs and upgrades to
the rigging system); and repairs to the waterproofing system of the elevated plaza. Phase II of the Civic Facilities
improvement project is supported by $7.9 million in previously issued bonds and $6.4 million in funding from the
2006A Bond issuance.

         Parking Fund: This fund accounts for the operating revenue and expenses of six City-owned and/or
controlled structured parking garages and five City-owned and/or controlled surface parking lots. Previously issued
bonds of $2 million provided funding for property acquisition, planning and design of additional garages to serve the
Church Avenue corridor of downtown. The first garage is to be built on Campbell Avenue between 3rd and 4th
streets with a capacity of approximately 250 spaces. The current bond issue provides $2.6 million for the continuing
construction of this garage. The second garage, to be funded with another $2.6 million of bonds in 2008, will be
located near the Jefferson Center and YMCA on Luck Avenue between 5th and 6th streets and provide approximately
250 spaces. These facilities will address a current and projected deficit of parking within the corridor created by
increased development such as the newly constructed YMCA, expanded Jefferson Center, new police building and
strong residential growth within the area.

        Market Building Fund: This fund accounts for the operation of the Historic Downtown Market Building
which currently houses approximately sixteen retail merchants and restaurants.

Regional Initiatives

         Regional initiatives include the delivery of public safety services, improvement of transportation services,
and cooperation between local governments and businesses to attract a low-fare carrier to the Roanoke Regional
Airport.



                                                         A-11
         Examples of regional public safety programs include the recently accredited Regional Fire-EMS Training
Center, the Clearbrook Fire/EMS Station and the new regional police driving range. Additional opportunities to
merge Fire and EMS services are also being considered.

         The Roanoke Valley Juvenile Detention Center is an 81 bed secure facility which was created under the
authority of the Counties of Botetourt, Franklin, and Roanoke and the Cities of Roanoke and Salem to provide the
delivery of regional juvenile detention services.

         The City and the State have provided funding for a Smart Way bus system which connects the Roanoke
Valley and the New River Valley. This new service provides a direct link between Roanoke with Blacksburg and
Virginia Tech. Another example of regional cooperation is the Maroon Express Bus, linking Salem’s Roanoke
College to the Valley View Mall area. There are also transportation services connecting Roanoke to Franklin
County, Rocky Mount and Ferrum College.

                                    CERTAIN FINANCIAL PROCEDURES

Description of Funds

         Roanoke’s Comprehensive Annual Financial Report includes the funds utilized to provide financial
accountability for City operations. The accounts of the City are organized on the basis of funds, each of which is
considered to be a separate accounting entity. The transactions in each fund are accounted for by providing a
separate set of self-balancing accounts which comprise its assets, liabilities, fund balance, retained earnings,
revenues and expenditures/expenses. The following is a description of the funds included in the City’s
Comprehensive Annual Financial Report:

General Fund

         The General Fund accounts for all revenues and expenditures which are not accounted for in the other
funds. Included in the sources of revenue to the General Fund are general property taxes, other local taxes
(including a 1% sales tax collected by the Commonwealth and remitted to the City), fines and forfeitures, licenses,
permits and privilege fees, the City’s share of certain Commonwealth-collected revenues and reimbursement of
certain City expenses shared by the Commonwealth.

        Major General Fund expenditures include the costs of general administration, police, fire, libraries, parks,
community development, public works, health and welfare, transfers to the School Board, transfers to other funds to
provide for certain capital expenditures, transfers to the Debt Service Fund to pay for debt service on general
government debt and operating transfers to Enterprise and Internal Service Funds.

Debt Service Fund

         The Debt Service Fund accounts for the general long-term debt service of the City, including School debt.
Bonded indebtedness related to the City’s Civic Facilities and Parking Enterprise Funds is accounted for in each of
its respective Enterprise Funds. Capital leases of Enterprise and Internal Service Funds are recorded in the
respective funds. Receipts of the Debt Service Fund consist of transfers from the General and School Funds,
payments from the Western Virginia Water Authority, and interest earnings.

Capital Projects Fund

         This fund accounts for all transactions related to City capital improvement projects (other than the
construction of enterprise facilities), which are financed principally through intergovernmental grants, the issuance
of general obligation indebtedness, interest earnings and transfers from the General Fund.




                                                       A-12
Enterprise Funds

          These funds account for the operation, maintenance, construction and debt service related to activities that
are operated in a manner similar to private business enterprises. Enterprise Funds include Greater Roanoke Transit
Company (Bus Service), Civic Facilities, Parking and Market Building. Revenues consist principally of charges for
services.

Internal Service Funds

        These funds are used to account for services provided by certain departments to other departments on a cost
reimbursement basis. Internal Service Funds include Department of Technology, Fleet Management and Risk
Management.

Fiduciary Funds

         These funds account for the assets held in a trustee capacity or as an agent for others. The Fiduciary Funds
include a Pension Trust Fund, which accounts for the operations of the City’s pension system, and an Agency Fund,
which accounts for assets held for the Hotel Roanoke Conference Center Commission.

Comprehensive Annual Financial Report (CAFR)

        Since 1973, the City’s financial statements have been audited annually by independent certified public
accountants. The most recently completed audit, for the fiscal year ended June 30, 2005, was performed by KPMG
LLP, Certified Public Accountants, Roanoke, Virginia.

         The accounting policies and procedures utilized by the City are in accordance with generally accepted
accounting principles. The modified accrual basis of accounting is used for the General, Debt Service, Special
Revenue and Capital Projects Funds. Under this method, revenues are recognized in the accounting period in which
they are objectively measurable and available. Expenditures, other than principal and interest on long-term debt and
compensated absences, are recorded when the related liability is incurred. Principal and interest on long-term debt
and compensated absences are recognized when due. Enterprise Funds, Internal Service Funds and the Pension
Trust Fund are accounted for on the accrual basis of accounting. The City of Roanoke has received the Certificate
of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association every
year since fiscal year 1974.

          The activities of the City of Roanoke Schools are reported in a separate School Fund. The School Board
issues a separately published Comprehensive Annual Financial Report reflecting the operations of the public school
system as a legally separate entity. The School Board’s operations are presented in the City’s annual financial report
in the form of a discretely presented component unit. Another discretely presented component unit is the Roanoke
Redevelopment and Housing Authority. Although legally separate, the City must include the component units in the
City’s financial reporting for fair presentation in conformity with Generally Accepted Accounting Principals.

        The Comprehensive Annual Financial Report of the City for the fiscal year ended June 30, 2005 is set forth
in Appendix C. It is also available from the Director of Finance, Noel C. Taylor Municipal Building, Room 465,
215 Church Avenue, S.W., P.O. Box 1220, Roanoke, Virginia 24011 or online at www.roanokeva.gov.

Budgetary Procedures

         The City Charter requires the City Manager to submit a balanced budget to the City Council at least 60
days prior to the beginning of each fiscal year. The annual budget process begins during the second quarter of the
previous fiscal year with the notification to department or agency heads of budget guidelines by the City Manager.
Budget requests are then reviewed by a budget committee. Meetings between the budget committee and department
heads are scheduled to review and discuss departmental requests. Upon completion of a detailed budget preparation


                                                        A-13
process, the City Manager prepares a proposed budget for submission to the City Council. Tax rates and fees for
services sufficient to produce needed revenues are proposed at this time.

         The proposed budget of the School Board is submitted to the City Manager for incorporation in the budget
presentation to the City Council. The City Manager may also make recommendations in the proposed budget
regarding the total appropriation for the school system. The City Council makes an annual appropriation for the
School Fund and authorizes capital projects for the school system. The City Council is prohibited from controlling
how funds are expended except it has the right to appropriate funds to the School Fund according to such major
categories as may be prescribed by the State Board of Education.

         Tax rates are established prior to the beginning of the fiscal year for which the budget is prepared. After
work sessions with the City Council and public hearings, the budget, as may be amended, is adopted in final form by
the City Council. During the fiscal year, monthly reviews of revenues and expenditures are undertaken by the
Department of Finance, and monthly financial statements are prepared and presented to the City Council. The City
has received the distinguished Budget Presentation Award from the Government Finance Officers Association every
year since 1986.

Financial Accounting Systems

         All financial and accounting records of the City and Schools are currently maintained on the Advantage
Financial System, a product of CGI-AMS which is designed especially for local governments. Advantage is an
integrated financial management system supporting the requirements for local government accounting and reporting
established by the Governmental Accounting Standards Board (GASB). The City’s payroll is currently processed
by GEAC Payroll’s Human Resource Management System. The City also utilizes an in-house, decentralized time
entry system. The City Treasurer uses IBM-based cash registers to process all revenue collected for the City.

          Within the next five years, the City has planned for many of these systems to be upgraded or replaced at a
total project cost of $9 million. The 2006A Bond series will provide $2.6 million to fund a portion of the upgrades
with the balance to be funded with cash. The goal is to obtain enterprise functionality and to utilize technology that
maximizes the user’s ability to retrieve data. The systems to be upgraded include the financial, payroll/human
resources, budget and tax/treasury systems.

         Current system replacement projects underway include the budget, accounting, and tax/treasury systems.
The new budget preparation system will streamline and promote a paperless budget process. Planned future
improvements of the budget system include an upgrade to a web-based version. An upgrade to the Advantage
Financial System browser version is planned for July 1, 2006. This project will significantly improve and
decentralize the reporting and analysis capabilities of the system. The selection of vendors for a new tax/treasury
system is also currently underway with implementation expected to occur in the next 18 months. The payroll/human
resources system project will begin in the summer of 2006.

Investment Management

         The City’s investment and cash management program is directed by the City’s Investment Committee
which is comprised of representatives from the offices of the Treasurer and the Director of Finance.

          City funds are invested in accordance with the Code of Virginia. The City has adopted an investment
policy, the objectives of which are to ensure safety and repayment of principal, provide flexibility to meet cash
requirements, maximize investment of all available funds, obtain the highest competitive yield on investments and
ensure investments are in compliance with the Reporting and Disclosure Regulations of the Governmental
Accounting Standards Board. In accordance with its investment policy, the City has never invested in instruments
referred to as derivatives, and does not employ leverage in its investments.




                                                        A-14
         During the fiscal year ended June 30, 2005, the City’s average portfolio size was approximately $52
million. This included investments of the governmental funds, proprietary funds and fiduciary funds, but excluded
the Pension Trust Fund. The funds are invested in a money market account, U.S. Treasury/Agency obligations,
repurchase agreements, the Local Government Investment Pool managed by the Commonwealth of Virginia and
commercial paper. It is the City’s policy to hold only investments rated at least AA/A1 by Standard & Poor’s, P-1
by Moody’s Investors Service, and B/C by Keefe, Bruyette & Woods, Inc.

                            GENERAL FUND REVENUES AND EXPENDITURES

         The following is a discussion of the General Fund revenue structure and major classifications of General
Fund expenditures. The information is based on audited data as of June 30, 2005. See Appendix C for the general
purpose financial statements of the City relating to the General Fund for the fiscal year ended June 30, 2005.

Revenues

         General Property Taxes. An annual ad valorem tax is levied by City Council on the assessed value of real
and personal property located within the City as of January 1 in the fiscal year preceding the fiscal year in which the
tax is due. The ratio of the assessed value of real property to its estimated fair market value is 100% as required by
the Code of Virginia. During a reassessment, all property values are examined and adjustments are made where
necessary to guarantee all property is assessed at market value. Real property taxes are payable in two installments,
on October 5 and April 5 of the fiscal year in which they are levied. Personal property taxes are due on May 31, and
are prorated in cases where a taxpayer owns the property only part of the year. A portion of personal property tax is
paid by the Commonwealth of Virginia in accordance with the Personal Property Tax Relief Act. The City’s current
rate is 5%. For the fiscal year ended June 30, 2005, property taxes (including penalties for late payment of prior
years’ taxes) represented 34% of total General Fund revenues.

        Other Local Taxes. The City levies various other local taxes including a sales and use tax, a tax on
consumer utility bills, business, professional and occupational license taxes, a cigarette tax, a transient lodging tax
and a prepared food and beverage tax. Other local taxes represented 33% of total General Fund revenues for the
year ended June 30, 2005.

         Intergovernmental Revenue. The City receives revenue from the Commonwealth of Virginia for a portion
of shared expenses including certain expenditures for social services, the operation of constitutional offices,
non-categorical aid, law enforcement, highway construction and operation of jail facilities. Revenues from the
Commonwealth of Virginia and Federal government represented 26% of total General Fund revenues in the fiscal
year ended June 30, 2005. The School Fund also receives a significant amount of aid from the Commonwealth in
support of the public school system.

         Other Revenues. Other sources of revenue represented 7% of total General Fund revenues and include
permits, fees, licenses, fines, forfeitures, rents, interest, charges for services and miscellaneous revenues.

Expenditures

          Costs of General City Government. Payments for the costs of the operation of the City government are
made from the General Fund. Such costs include expenditures for general administration, judicial administration,
public safety, public works, health and welfare services, community development, parks, recreation and cultural, and
economic development. This classification represented 64% of total General Fund expenditures and transfers during
the fiscal year ended June 30, 2005.

          Costs of Education. A portion of the taxes levied by the City fund the operation of the City of Roanoke
Public Schools. The local funding of the School Board Component Unit represented 24% of total expenditures and
transfers from the General Fund in the fiscal year ended June 30, 2005.



                                                        A-15
         Transfers to Debt Service Fund. Debt service requirements on City general government indebtedness are
paid by a transfer from the General Fund to the Debt Service Fund. During the fiscal year ended June 30, 2005,
such transfers represented 7% of total General Fund expenditures and transfers.

          Transfer to Other Funds. Transfers are made to fund capital projects and provide local match on grants.
Transfers are also made to proprietary funds in the form of operating subsidies or to fund capital projects. During
the fiscal year ended June 30, 2005, such transfers represented 5% of the total General Fund expenditures and
transfers.




                                                      A-16
                           SUMMARY OF GENERAL FUND REVENUES AND EXPENDITURES

              Presented below are the summarized financial data for the General Fund revenues and expenditures as
    budgeted for the fiscal year ending June 30, 2006 and the actual amounts for the five fiscal years ended June 30,
    2001 through June 30, 2005. Data for the fiscal year ending June 30, 2006 represent the initial adopted budget for
    the year.

             The summary statement for the fiscal years 2001 through 2005 has been compiled from the audited general
    purpose financial statements. Data for the fiscal year ended June 30, 2005 should be read in conjunction with the
    related general purpose financial statements and notes thereto appearing in Appendix C.

                                                                General Fund (a)
                                                                                                                                            Adopted
                                                                                                                                             Budget
                                                                                                                                             Fiscal
                                                                                                                                          Year Ending
                                                                        Fiscal Year Ended June 30 (b)                                      June 30 (c)
                                            2001                 2002                2003             2004                  2005              2006

 Revenues:
   Local taxes (d)                         $134,202,448      $137,329,042          $139,415,946     $138,027,923        $145,738,157        $159,044,000
   Permits, fees and licenses                   840,520           1,076,603              909,669       1,026,606           1,275,026             1,069,000
   Fines and forfeitures                        818,982           1,103,113            1,244,283       1,365,502           1,354,775             1,354,000
   Rents and interest                         1,044,448           1,100,101            1,114,804         682,798              796,688              722,000
   Intergovernmental                         43,731,237(d)      45,586,344(d)         44,848,086      54,469,375          57,980,957           49,808,000
   Charges for services                       5,709,059           6,073,913            6,657,533      11,544,955          11,114,029           11,418,000
   Miscellaneous                                295,247             600,109(e)           800,957(g)      409,829              593,786              384,000
 Total revenues                             186,641,941       192,869,225           194,991,278      207,526,988         218,853,418         223,799,000
 Expenditures:
   General government                        11,670,266         11,544,730            11,638,167      11,679,508          11,457,219           12,088,397
   Judicial administration                    5,523,902           5,744,286            5,982,484       6,167,192           6,505,813             6,810,241
   Public safety                             44,029,624         45,261,524            44,908,836      49,472,103          52,652,595           55,067,334
   Public works                              22,894,595         23,336,521            23,184,404      24,688,073          22,229,895           23,293,630
   Health and welfare                        24,992,857         26,830,719            27,528,710      29,547,355          32,365,693           30,579,498
   Parks, recreation and cultural             4,645,232           4,896,025            4,542,865       5,131,486           8,364,754             9,582,533
   Community development                      3,983,755           5,001,639            5,378,400       6,010,405           5,454,055             5,399,952
   Nondepartmental                               13,075              68,037                73,633         90,903              125,801            2,487,259
 Transfers (net):
   School Board Component Unit               48,508,397         46,617,823            47,408,556      49,520,072          52,676,279           54,352,299
   Debt service fund                          9,686,166         12,266,899            16,847,042      15,270,488                9,082(h)       17,724,718
   Capital projects fund                      6,834,318           6,439,336            4,945,967       4,914,289           5,294,514             3,204,476
   Other funds                                3,793,635           7,153,034            5,759,792       7,091,966           5,165,469             3,208,663
 Total expenditures and Transfers           186,575,822       195,160,573           198,198,856      209,583,840         202,301,169         223,799,000
 Net increase (decrease) in Fund                 66,119         (2,291,348)           (3,207,578)     (2,056,852)         16,552,249                    -0-
 Fund balance, beginning of year              9,020,592          12,053,783(f)         9,762,435       6,554,857           4,498,005           21,050,254
 Residual equity transfer                            -0-                 -0-                   -0-             -0-                  -0-                 -0-
 Fund balance, end of year                   $9,086,711         $9,762,435            $6,554,857      $4,498,005         $21,050,254         $21,050,254
Notes:
 (a) The summary has been prepared in accordance with generally accepted accounting principles prescribed by the Governmental Accounting Standards
      Board (GASB). See the general purpose financial statements included in Appendix C for more detailed information.
 (b) The above summary presents audited actual revenues, expenditures and fund balances of the General Fund of the City for the five fiscal years ended June
      30, 2001 through June 30, 2005.
 (c) The amounts shown for FY 2006 represent the City’s adopted budget.
 (d) To enhance year to year comparability, the portion of personal property tax paid by the Commonwealth of Virginia is classified as a local tax, which
      differs from the classification in the City’s Comprehensive Annual Financial Report (CAFR). The State share of personal property tax is classified as
      Intergovernmental Revenue in the CAFR.
 (e) Includes transfer of $112,008 resulting from closure of the Management Services Fund.
 (f) Fund balance restated due to the City’s change in availability period related to tax revenues.
 (g) Includes transfer of $349,445 resulting from closure of the Materials Control Fund.
 (h) Amount is net of the transfer of $15,500,000 from the Debt Service Fund to the General Fund in order to create a budget stabilization reserve.



                                                                        A-17
                                       ECONOMIC AND DEMOGRAPHIC FACTORS

Population

         The City of Roanoke is the Commonwealth’s largest city west of Richmond and the economic center of
western Virginia. The metropolitan statistical area, of which the City is the focal point, includes the Cities of
Roanoke and Salem, the Town of Vinton, and the Counties of Roanoke, Botetourt, Craig and Franklin with a
population of 290,497 (2000). Recent population statistics for the City are presented below.

                                                    Population of the City of Roanoke

                     1950 (U.S. Census) ...............................................................             91,921
                     1960 (U.S. Census) ...............................................................             97,110
                     1970 (U.S. Census) ...............................................................             92,115
                     1980 (U.S. Census) ...............................................................            100,220
                     1990 (U.S. Census) ...............................................................             96,509
                     2000 (U.S. Census) ...............................................................             94,911
                     2001 (Weldon Cooper Center)..............................................                      95,000
                     2002 (Weldon Cooper Center)..............................................                      94,600
                     2003 (Weldon Cooper Center)..............................................                      93,100
                     2004 (Weldon Cooper Center Estimate)...............................                            92,600
                     2005 (Weldon Cooper Center Estimate)...............................                            92,600

                                                            2000 Population by Age

                     1 - 19.....................................................................................    23,455
                     20 - 24...................................................................................      5,746
                     25 - 44...................................................................................     28,948
                     45 - 54...................................................................................     13,098
                     55 - 59...................................................................................      4,555
                     60 - 64...................................................................................      3,549
                     65 - 84...................................................................................     13,362
                     85 +.......................................................................................     2,198
                     Total .....................................................................................    94,911

                                                            2000 Population by Race

                     White ....................................................................................       69.40%
                     Black.....................................................................................       26.70
                     Asian or other Pacific Islander .............................................                     2.20
                     Other Race............................................................................            1.50
                     American Indian, Eskimo or Aleut.......................................                           0.20
                                                                                                                     100.00%
__________________
Source: Weldon Cooper Center for Public Service, US Census Bureau
Notes: Hispanics represent 1.5% of Roanoke’s population and are included as part of several categories.




                                                                            A-18
Personal Income

          Median adjusted gross income for married couples in the City and in the Commonwealth of Virginia for the
fiscal years 1999 through 2003 is shown in the table below:

                                 Median Adjusted Gross Income (Married Couples)

                                                 1999             2000            2001         2002           2003

City of Roanoke                                $39,766         $41,191           $41,938     $41,920         $42,297
Commonwealth of Virginia                        53,745          56,530            57,619      57,924          59,250
_____________
Source: University of Virginia Weldon Cooper Center for Public Service.

         The following table compares per capita personal income for the City, the Commonwealth and the United
States for recent calendar years:
                                                         Per Capita Income

                                                1999              2000             2001        2002           2003

City of Roanoke                               $23,769          $24,698           $25,886      $28,171        $28,814
Commonwealth of Virginia                       29,226           31,087            32,534       32,964         33,730
United States                                  27,939           29,845            30,575       30,804         31,472
_____________
Source: Bureau of Economic Analysis.




Construction Activity

         The following table presents data on construction activity in the City during recent years:

                                                        Value of Building Permits

                     Commercial                              Residential                               Total
  Year          Number     Valuation                   Number       Valuation              Number          Valuation

  1996             578            $28,274,653          1,590              $21,936,194      2,168         $ 50,210,847
  1997             580             42,373,274          1,678               18,729,936      2,258           61,103,210
  1998             569             49,600,839          1,652               28,920,020      2,221           78,520,859
  1999             567             56,706,299          1,543               24,952,546      2,110           81,658,845
  2000             575             89,654,863          1,363               31,155,220      1,938          120,810,083
  2001             572             57,716,867            988               45,045,159      1,560          102,762,026
  2002             499             64,101,308            875               36,855,003      1,374          100,956,311
  2003             437             60,291,138            730               21,844,483      1,167           82,135,621
  2004             871             57,922,598            303               13,331,017      1,174           71,253,615
  2005             497            111,829,238            610               23,936,990      1,107          135,766,228
_____________
Source: City of Roanoke.




                                                           A-19
Housing

          The following data is presented to illustrate the nature of housing in Roanoke for recent years:

                                                              2001       2002      2003         2004          2005

   Number of Single-Family Units                             28,132     28,417    28,557      28,765         29,085
   Number of Multi-Family Units                              15,994     16,149    16,289      16,286         17,303
      Total                                                  44,126     44,566    44,846      45,051         46,388

   Average Single-Family Unit Value                         $82,719    $86,404   $93,229    $100,707     $109,819
_____________
Source: City of Roanoke, Office of Real Estate Valuation.

          The City is committed to provide housing in quality neighborhoods, an important economic development
tool, by taking a multi-tiered approach to expanding its housing option and by diversifying housing opportunities.
The City has designated Community Development Block Grant funds to targeted neighborhoods in an effort to
maximize results on housing and urban development. The Colonial Green project, covering 23 acres, will contain
221 single family detached homes, row houses, multi-family units, crescent homes and commercial buildings. The
value of each unit is estimated to be between $200,000 and $275,000. Groundbreaking for this project was held in
October 2005, and Colonial Green LLC will spend $49 million on this development over a period of seven years.
Other housing developments under construction include the Pinnacle Ridge, Southwood, and Wellington
subdivisions. Homes in these locations will be valued at $250,000 and up. Additionally, the 400 block of Day
Avenue, owned by Christian Housing Fellowship, LLC, was purchased with City funds by the Roanoke
Redevelopment and Housing Authority (RRHA) for conversion to owner-occupied housing. RRHA will also build
50 new low-income rental units elsewhere in the City over a seven year period to be operated as affordable housing
for at least ten years after completion. Five other properties with 15 low-income rental units, owned by Christian
Housing Fellowship LLC, were given to Total Action Against Poverty (TAP) to maintain.

         In 2005, the City sponsored a groundbreaking new competition to stimulate innovative and affordable
housing alternatives. The Cradle 2 Cradle (C2C) Home Competition received more than 625 design submissions
from 41 countries worldwide and garnered international recognition. This unique approach to home design
emphasized the utilization of environmentally compatible building methods and materials. Plans are under way to
construct several of the winning designs over the new few months at sites within the City.



Transportation

           Economic activity in Roanoke is directly associated with the City’s position as the major trade and
transportation center in western Virginia, a position the City enjoys due to its location at the intersection of major
rail and highway routes and due to its major regional airport. The following is a brief description of transportation
facilities and services provided.

Highways

         Located approximately equidistant between New York City and Atlanta, Roanoke is connected to the
nation’s network of interstate highways by Interstate 81, which runs north-south through the Shenandoah Valley of
Virginia. U.S. Route 460, connecting the City to Virginia’s Tidewater port facilities and other interstate routes,
provides direct east–west travel. U.S. Routes 220 and 11 provide alternate arteries for automotive traffic in the
City’s metropolitan statistical area. Interstate 581 connects the downtown and Roanoke Regional Airport directly
with Interstate 81 and U.S. Route 220. Interstate 73, which will run from Michigan to South Carolina, is proposed
to follow a route passing through Roanoke along Interstate 581.



                                                                A-20
Railroads

        Roanoke was established in the late 1800s at the junction of the Norfolk and Western (N&W) and
Shenandoah Valley railroads. Over the years, N&W and Southern Railway were consolidated into Norfolk Southern
(NS), now one of the nation’s largest and most prosperous transportation companies. In 1999, Conrail was
dismantled, with NS acquiring some lucrative lines from Conrail into the northeastern portion of the United States.

         Local operations of Norfolk Southern include Accounting, Communications and Signals, Finance and
Treasury, Information Technology, Internal Audit, Law Department – Claims, Maintenance of Way and Structures,
Marketing, Material Management, Mechanical, Public Relations, Research and Tests, Safety and Environmental,
and Taxation departments. Norfolk Southern has expressed an interest in locating an intermodal transportation
center in the Roanoke valley. The center would provide the means to transporting goods using truck, rail, and ship
and would allow Norfolk Southern to aggressively compete with trucking companies.

         The railroad has been a major factor in Roanoke’s industrial development. In the early 1990s, two area
governments formed the Roanoke Valley Resource Authority, which awarded Norfolk Southern the contract to
transport solid waste by rail from the transfer station, east of downtown, to the regional landfill, 33 miles away.

Air Transport Services

         Roanoke’s Woodrum Field, which is owned and operated by the Roanoke Regional Airport Commission, is
serviced by the regional affiliates of four major carriers including Delta Connection, Northwest Airlink, United
Express and US Air Express. These airlines offer 35 nonstop flights per day to eight destinations, including major
hubs with hundreds of flights to cities beyond. Regional jet service is available from Roanoke to the eight cities of
Atlanta, Charlotte, Chicago, Cincinnati, Detroit, New York, Philadelphia and Washington-Dulles.

        The Roanoke Regional Airport Commission owns and operates the airport. The City of Roanoke and the
County of Roanoke each appoint members to the Commission.

         In 2004, 310,689 passengers were enplaned at the airport, and 36,372 scheduled aircraft operations took
place. Roanoke Regional Airport’s primary and secondary passenger service area extends outward over a 60-mile
radius, encompassing at least 19 counties, including three in West Virginia. The total population of this service area
is over 920,000. In addition, an average of 122 general aviation aircraft are based at Roanoke. One full service and
three specialty fixed base operators are located on the field, as well as the training area for the aviation magnet high
school. General aviation landings and takeoffs in 2004 totaled approximately 47,305.

         In addition to air passenger carriers and general aviation users, three major air cargo companies fly into and
out of the airport on a scheduled basis carrying 13,643 tons of air cargo in 2004. United States Customs provides
services upon request.

         The airfield consists of approximately 900 acres, with two runways. One runway is 5,800 feet long, and
the other is 6,802 feet long to facilitate safe aircraft operations in adverse weather conditions. They are both
equipped with instrument landing systems. A six-gate, 95,000-square-foot passenger terminal serves the airport.

         More than $60 million in upgrades of both runways and related taxiways, as well as an expansion of the
overflow parking lot and construction of a new FAA control tower were recently completed. Other projects
underway include continuing redevelopment of the general aviation area and the relocation of certain taxiways. In
addition, a free advanced wireless system has been installed to permit passengers’ access to the Internet and e-mail.
The City, the Airport, and Roanoke Valley business have partnered in efforts to attract a regional, low-fare carrier.




                                                         A-21
Truck and Bus Service

         A number of interstate carriers are authorized to operate in the area. Specialized trucking services in the
region include hauling and rigging, tank trucks, household moving, and parcel delivery.

         Passenger bus service is available via Greyhound Bus Lines, with numerous schedules daily for local and
long distance travel.

          The Greater Roanoke Transit Company, which is owned by the City, provides local bus service for over 1.9
million passengers annually along 18 routes throughout the City and to specific destinations throughout the Roanoke
Valley and now including the New River Valley by way of the Smartway Bus. The Transit Company owns and
operates a state of the art operations, maintenance and administrative facility and the Campbell Court Intermodal
Transportation Center in Downtown Roanoke, which serves as the focal point for all but one of the bus routes. With
a total fleet of 44 buses, the Transit Company operates 34 buses in the peak hours of operation and 19 buses in the
non-peak hours. All 44 of the Transit Company’s buses are wheelchair accessible to better serve the community.
The fleet consists of models dating 1994 through 2004.

Water and Wastewater Pollution Control

          The Western Virginia Water Authority commenced operations on July 1, 2004. Formed by the
consolidation of the City’s and the County of Roanoke’s drinking water and wastewater pollution control functions,
the Water Authority’s mission is to ensure an adequate supply of drinking water and wastewater treatment program
for Roanoke Valley residents. The Water Authority is also undertaking to equalize water and wastewater treatment
rates between City and County residents over the six-year period ending in 2010. The Water Authority provides
drinking water to 155,000 citizens, and wastewater service to more than 120,000 people throughout the entire
Roanoke Valley. The Water Authority is governed by a seven-member board, with three members appointed by the
City, three members appointed by the County, and a seventh member appointed by the other six.

          The Water Authority owns and operates the Carvins Cove Reservoir and Filtration Plant, the Spring
Hollow Reservoir and Treatment Plant, the Crystal Spring Filtration Plant, and the Falling Creek Reservoir and
Filtration Plant. The Water Authority maintains 1,000 miles of water mains, 960 miles of sewer mains and more
than 4,000 fire hydrants in the City and County. It treats more than 37 million gallons of wastewater every day. The
Water Authority is currently making improvements to interceptor lines and a major expansion to the Water Pollution
Control Plant.

         Pursuant to the Operating Agreement among the City, the County, the Water Authority and the Virginia
Resources Authority, the Water Authority assumed certain liabilities of the City and the County representing
obligations secured by revenues related to the respective drinking water and wastewater utilities, and agreed to pay
to the City and the County amounts equal to debt service due on the localities’ liabilities not legally assumed by the
Water Authority. The City’s obligations not assumed by the Water Authority include the City’s general obligation
debt issued by the City for its Water and Water Pollution Control Enterprise functions. The Water Authority has
agreed to pay to the City amounts equal to debt service on this general obligation debt. The Water Authority has
covenanted under the Operating Agreement to fix, charge and collect rates, fees and charges sufficient to pay
expenses of the Water Authority and pay debt service on assumed obligations and the City’s affected general
obligations. A summary of these general obligation bonds is shown on page A-35.

Flood Remediation Efforts

         The City has completed three of four phases of the Peters Creek Flood Reduction project, which provides
flood reduction measures for the Peters Creek Watershed. The project included channel widening, replacement of
four bridge structures, clearing of debris and the construction of detention basins to prevent storm water runoff.
Phase four will provide for resolution of localized drainage problems.



                                                        A-22
         The Roanoke River Flood Reduction project, which was partially funded with general obligation bond
proceeds, is under construction by the United States Army Corps of Engineers. This project consists of a
combination of channel widening and levy construction along nine miles of the Roanoke River within the City and
will reduce annual flood damages along the Roanoke River by approximately 50%. These flood reduction efforts
are significant to many areas of Roanoke including much of the downtown area. An additional $5 million was
recently awarded by the state to help with the costs involved in this project.

Commerce, Industry and Employment

          The economy of the City is an integral part of the economy of the entire Roanoke metropolitan area. While
the City, the Counties of Botetourt, Craig, Franklin and Roanoke, and the City of Salem have separate political
identities, in economic terms they function as a single unit with the City as their economic center.

         The pattern of much of Roanoke’s economy was established prior to 1920. Roanoke’s economic base,
however, has become more varied since the economic recession of the late 1950’s. Today, Roanoke’s economy is
well diversified, with 100% of all census–defined industries located within its boundaries. The City is home to 41%
of the companies in the Metropolitan Statistical Area and employs 48% of the area’s employees. The economy of
the City, as well as the entire Roanoke metropolitan area, is predominantly non–agricultural. The economic base
consists of service industries, wholesale and retail trade, manufacturing, governmental activity, transportation and
other non–farm activities.

                            City of Roanoke Employment & Wages by
                                        Industrial Sector
                                       First Quarter, 2005

                                 Industry               Employment
                          Services                     29,785        41.6%
                          Trade                        13,360        18.6%
                          Government                    8,735        12.2%
                          Manufacturing                 4,887         6.8%
                          Finance, Insurance,
                            Real Estate                 4,733         6.6%
                          Construction                  4,493         6.3%
                          Transportation and
                            Communications              3,600         5.0%
                          Utilities, Agriculture
                            and Information             2,083         2.9%

                          TOTAL:                       71,676       100.0%

        The largest industry, services, is mainly comprised healthcare-related activities which employs
approximately 34% of the services industry, due, in part, to Roanoke’s serving as the regional medical center of
southwestern Virginia.

         Trade is also a large industry in the region as a result of a combined population close to one million located
within a one-hour drive of downtown Roanoke and has effective buying income of over $11.2 billion. Roanoke’s
per capita taxable sales in 2004 were $12,001, the second highest in the Commonwealth of Virginia.

       Manufacturing is also a well represented industry in the Roanoke MSA as a result of a broad range of
companies producing items from steel, bread and apparel to fiber optics, chemicals and communication systems.



                                                        A-23
                                             MSA Major Private Employers as of September 2004
                                                                                                                       Approximate
Employer                                                                  Product or Industry                       Number of Employees

Carilion Health Systems                                                   Healthcare                                        7,740
Advance Stores Company                                                    Auto Parts Distributor/Retail                     2,000
Wachovia                                                                  Banking                                           1,940
Wal-Mart Stores                                                           Retail                                            1,670
Lewis-Gale Hospital                                                       Healthcare                                        1,500
Kroger                                                                    Grocer/Distributor                                1,440
M W Manufacturers, Inc.                                                   Windows/Doors                                     1,350
Allstate Insurance Company                                                Insurance                                         1,330
Norfolk Southern Corporation                                              Transportation                                    1,300
Medical Facilities of America                                             Nursing Homes                                     1,090
Home Shopping Network                                                     Distribution Services                               980
Manpower Temporary Services                                               Temporaries                                         940
Yokohama Tire Corporation                                                 Tires                                               880
Anthem Blue Cross/Blue Shield                                             Insurance                                           840
Lewis-Gale Clinic                                                         Healthcare                                          800
___________
Source: Virginia Employment Commission


                                                                Roanoke Metropolitan Area
                                                               (Data Not Seasonally Adjusted)

                                                                                                          Dec                   Dec
                                                                                                          2003                  2004
LABOR FORCE DATA (Place of Residence)
Civilian Labor Force ......................................................................               147,413              155,660
  Employment................................................................................              142,124              151,562
  Unemployment............................................................................                  5,289                4,098
    Percent of Labor Force............................................................                       3.6%                 2.6%
    State Rate (%) .........................................................................                 3.6%                 3.0%
    National Rate (%) ...................................................................                    5.4%                 5.1%
ESTABLISHMENT DATA (Place of Work)
Nonagricultural Employment .........................................................                      148,593              149,393
Manufacturing ................................................................................             16,633               17,290
Construction and Mining................................................................                     9,733                9,591
Transportation and Communications .............................................                             5,839                6,109
Trade .............................................................................................        27,705               27,029
  Retail...........................................................................................        21,244               20,459
  Wholesale....................................................................................             6,461                6,570
Finance, Insurance & Real Estate...................................................                         9,143                8,902
Information.....................................................................................            2,714                2,542
Services ..........................................................................................        55,616               56,116
Government....................................................................................             20,697               21,155
  Federal ........................................................................................          3,621                3,674
  State & Local ..............................................................................             17,076               17,481
___________
Source: Virginia Employment Commission




                                                                                   A-24
Economic Development

         The City of Roanoke continues to promote ongoing economic development activity. City Council is
committed to creating jobs for its citizens and generating new sources of tax revenue by strengthening and
diversifying the local economy. The following narrative highlights those activities occurring in the City.

Site and Building Development

Riverside Centre for Research and Technology

          The Riverside Centre for Research and Technology (RCRT) is a 110-acre technology park. Located along
Jefferson Street and Reserve Avenue, this area has been designated as a redevelopment area. The Roanoke
Redevelopment and Housing Authority has purchased the acreage in the area for the initial site of the Carilion
Biomedical Institute (CBI). In early June 2005, a groundbreaking for the first $8 million, 55,000-square-foot office
and laboratory complex was held. CBI will occupy 23,000 square feet of the building, while Luna Innovations, a
Blacksburg company involved with medical and drug research, nano-technology and other areas, will locate
approximately 50 employees in the remainder of the building. Luna Innovations plans to hire an additional 50
employees by the summer of 2008. Plans also call for the location of the 50,000-square-foot, $8 million Carilion
Consolidated Laboratory near this initial site later this fall. The new lab will be located between Carilion
Community Hospital and Carilion Roanoke Memorial Hospital, and it will offer services to hospitals and doctors’
offices in the eastern United States. This project will serve as a proving ground for research financed by CBI and
conducted on the campuses of both Virginia Tech and the University of Virginia.

         Based on the size of the developable property in the proposed redevelopment area, $175 million in capital
expenditures are anticipated over the term of the project. This investment equates to $2,135,000 in real estate taxes,
using the present tax rate. Approximately 2,500 employees could work in the area.

         Within the area, a 1,000–space parking garage, a day care center and a surgical center have been
completed. Carilion is underway on a three-year, $105 million construction project. The project will expand
Carilion Roanoke Memorial Hospital with a five-floor addition to the current tower and a five-floor expansion
outward. In addition, Carilion Community Hospital will close as an inpatient facility to become the site for
Jefferson College of Health Sciences, allowing for expansion of the college from 650 to 1,200 students.

Roanoke Centre for Industry and Technology

           The Roanoke Centre for Industry and Technology (RCIT) is a 496-acre, City–owned industrial complex
located just minutes from Interstates 581 and 81. This industrial park was acquired, developed and marketed by the
City. The City continues its excellent record of attracting top corporations, enhancing the tax base and creating jobs
for its citizens. One hundred forty acres for five ready–to–go sites, ranging in size from seven to thirty-one acres are
now available. Fifty-six acres are remaining to be developed for future prospects.

         Revenue generated from the corporations located in the RCIT exceed the cost incurred by the City for the
original site acquisition and improvements to the park such as site preparation, utilities and extension of Blue Hills
Drive. Present and future tax revenue will be used to continue this type of economic development. Current tax
revenue exceeds $1.0 million annually.

         The corporations located in the RCIT employ in excess of 1,960 persons, have a combined investment in
the Centre in excess of $145 million and occupy over 1.9 million square feet of space. Corporations currently in the
Centre include Crouse-Hinds, a division of Cooper Industries, R&K Engineering, Advance Auto, BellSouth
Communications Systems, Elizabeth Arden, Orvis, InfoSeal, Virginia Utility Protection Services and Maple Leaf
Bakery.




                                                         A-25
          Heritage Point is a historic area located within RCIT. A 19th-Century cabin has been restored and a horse
barn for the City’s Mounted Patrol is located here along with grazing areas for the horses.

         Elizabeth Arden completed construction of a 34,000-square-foot expansion to its facility and Maple Leaf
Bakery completed another $12 million expansion in 2004. In addition, Semco Manufacturing, Inc. completed a $6
million, 60,000-square-foot building with plans to expand another 40,000 square feet and hire 25 new employees by
2006.

         A proposal was made by a company in October 2005 to purchase Site 12 at the entrance to the park and call
it Blue Hills Village. The acreage here would be combined with acreage in Roanoke County to form a village
setting with a proposed hotel, pharmacy, bank, day care center, restaurants and small office buildings.

Deanwood Industrial Park

          Deanwood Industrial Park, a 13-acre site, is located one-quarter of a mile from Interstate 581. Foot
Levelers, Abal Material Handling, Azimuth, Inc. and Century Business Center have constructed new facilities there.
To meet the demand for industrial land in the Deanwood area, Deanwood Extension, a ten-acre tract of land with rail
service available, was later developed. Yellow Cab Company bought land in Deanwood and has completed its new
facility at a cost of $465,000, while Magnets USA spent over $250,000 on an expansion. Quality Coffee and
Mountain Spring Water has submitted plans for a 12,756-square-foot addition to accommodate their growing
business. This area also houses Marco Supply Company, Hamco, VBS Inc. Material Handling Equipment, and
Moody Polaris.

Countryside Golf Course

          During 2005, the City purchased the approximately 140 acre Countryside Golf Course located along
Interstate 581 for development of housing and commercial activities. A contract for a study related to the best uses
of the land will be awarded soon.

Downtown Development

         The new Enterprise Zone One A, encompassing the majority of downtown, was designated by Governor
Warner in July 2004. The former Enterprise Zone One was instrumental in the development of the downtown in the
past twenty years, and this new zone should follow suit.

         Several new shops have opened in the downtown area in 2005. Among them are the men’s and women’s
clothing shop, Noel and Jones Clothing Co., and De Expresso, a shop selling Seattle’s Best coffee products, along
with the Bistro at Campbell, a restaurant, and Candy Bouquet, a franchise of candy and silk flower arrangements.
Through September 2005, 65 building permits valued at almost $8.6 million and 28 new business licenses were
issued in the central business district. The City also issues permits for outdoor dining downtown, and eight
downtown restaurants have taken advantage of this opportunity.

          An extension of the free wireless Internet zone, or WiFi, was added to the offerings around the Market area
this year. Sponsored by the City of Roanoke, Downtown Roanoke, Inc. and the New Century Technology Council,
this service, combined with outdoor dining and various wireless kiosks around the area, have added to the ambience
of the downtown.

         Several renovation or construction projects are currently underway to provide both retail and residential
opportunities. HSMM, formerly Hayes, Seay, Mattern and Mattern, is relocating its corporate staff to the former
InSystems building on Warehouse Row. The Colonial Bank building now houses the new HomeTown Bank, which
hired 26 employees upon opening in November 2005. It also houses upscale condominiums on the upper floors.
The State and City building will continue to house Frank L. Moose Jewelers and will also add new upscale
condominiums. Other structures currently undergoing renovations to create additional downtown living space


                                                       A-26
include the Harris Office Furniture building and the Ewald-Clark building. Additionally, the Western Virginia
Water Authority purchased and moved into the Coulter Building last fall. The City’s landmark vintage H&C Coffee
neon sign was moved to the top of the Shenandoah building to make way for the new art museum. Completely
rehabbed at a cost of $157,000, the coffee sign was relit in November 2005.

         The Historic Market Building, in the center of the downtown market area, has undergone $1.9 million in
renovations. A new roof and new air conditioning units account for the majority of the expenditures. The Historic
Market Building is home to a food court, as well as retail stores, and continues to draw visitors to the area. In 2005,
the City hired Duany Plater-Zyberk & Co. to conduct a study of the market area. Workshops were held in early
October 2005 (with the final report expected soon). This study will outline a recommended plan for the downtown
market area’s future.

          The City has pledged $4 million for construction of the new Art Museum of Western Virginia. A portion
of the current bond issue is to be used for funding of this proposed 75,000-square-foot facility. The new Art
Museum was designed by the emerging Los Angeles architect Randall Stout, who is an international proponent of
sustainable “green” architecture. The building is a dramatic composition of steel, patinated zinc and high
performance glass which pays sculptural tribute to the city’s surrounding mountains. This structure will be built on
land donated by the City on Salem Avenue, between Market Street and Williamson Road, one of the most visible
intersections in downtown. Total cost of the project is estimated at $51 million. A ground breaking celebration was
held September 2005 with expected completion by Fall 2007. The project was featured in an article in the
Washington Post due to its innovative architectural design.

         Renovation is under way in the Gainsboro neighborhood, Roanoke’s oldest community. Originally
established in the mid-1800’s, Gainsboro was recently named to the Virginia Landmarks Register by the state
Department of Historic Resources. It was a residential and cultural center for the City at one time, and the
Gainsboro Neighborhood Revitalization Initiative establishes several major goals for the restoration of the
neighborhood. Various project are already under construction. The City has committed $500,000 over five years
toward the $3.6 million cost of renovating the Dumas Center for Artistic & Cultural Development. An additional
floor will be added to the present building to create a home for Youth on the Yard Players, a theater-based program
for youth 10 to 15 years of age of all races and economic backgrounds. Once completed in spring 2006, the building
will also become the home of Opera Roanoke, the Downtown Music Lab, the Dumas Drama Guild, and the
Northwest Jazz Band. The building will hold these offices as well as a 260-seat auditorium. Additionally, the
Roanoke Higher Education Center received a $1 million grant from the Claude Moore Charitable Foundation of
Fairfax to build a culinary arts school on Henry Street. This $2 million project will restore the old Ebony Club and
an accompanying building to create a culinary arts school. An extension of Bristol’s Virginia Intermont College, the
project will provide teaching kitchens, a small café space, an office and a classroom to diversify the educational
options in the Roanoke Valley. Renovation plans are also underway for the First Street/Martin Luther King, Jr.
Bridge and Memorial.

New Business — Corporate Arrivals

         The following companies have established operations in Roanoke:

         Ivy Market is a new village shopping center planned for the corner of Franklin Road and Wonju Street.
The shopping center will have approximately 150,000 square feet of retail space and result in an investment of
approximately $20 million. Planned for this site are a grocery store component, a drug store component, retail and
office space, as well as restaurants. Ukrop’s Super Markets has announced it will open a 58,000-square-foot store in
the Ivy Market Shopping Center. Ukrop’s is a full-service super market, based in Richmond, Virginia, with 28 retail
food stores in Virginia.

         FreightCar America now builds aluminum coal cars at the once vacant East End Shops of Norfolk
Southern. The Illinois-based company currently has 200 employees with plans to start a second shift in the second
quarter of 2006, creating an additional 200 jobs. FreightCar America has invested approximately $5 million in
track upgrades, building improvements and equipment.

                                                        A-27
        Fresh Market, an upscale grocery store, opened in early October 2005 in the Towers Shopping Center and
occupies 24,000 square feet.

         Surgical Tools Inc. a leading on-line supplier of high quality surgical instruments, moved its operations
from Connecticut to Roanoke in December 2004. It currently has five employees, but plan to hire 15 to 30
additional workers during the next five years.

         Conwed of Minneapolis bought NSW, LLC, a maker of specialty plastic products, to expand its product
line. The company will remain in Roanoke with no reduction in work force.

         Food Giant, an 11,500-square-foot grocery store, opened in February 2005. This grocery store is the first
centrally located grocery store in this section of the City in 10 years.

       TelCove, which offers advanced fiber optic networks and is based in Pittsburgh, purchased KMC
Telecom’s operations in Roanoke. All nine Roanoke employees will retain their jobs.

Existing Business — Retention and Expansion

         Carilion Health System announced several projects over the course of the year which have previously been
described in this document. These include an expansion of Carilion Roanoke Memorial Hospital, construction of
Carilion Biomedical Institute’s headquarters at the Riverside Centre for Research and Technology, and the creation
of the Carilion Consolidated Laboratory.

         Lucas Therapies purchased a 15,000-square-foot building, which it will renovate to include treatment
rooms and a wellness center, complete with treadmills and Nautilus equipment. The facility will also house a
therapy pool.

          Home Depot will construct another store on the southern end of the City to house a 100,000-square-foot
retail store and a 28,000-square-foot garden center. This development will also provide a new entrance to the
Southern Hills neighborhood.

          Advance Auto Parts expanded at its Crossroads Mall location by renovating an additional 73,000 square
feet for office space. This doubled the size of its support center.

          Roanoke Electric Steel announced plans for an upgrade to its mini-mill’s “melt shop” in January 2005. In
October 2005, Steel Dynamics announced its purchase of the company, resulting in an increase of Steel Dynamics
total steel making capability to approximately 5.2 million tons per year. The company plans to spend $50 to $80
million on improvements to plants in both Roanoke and Huntington, West Virginia.

         Tinnell’s Finer Foods completed a $300,000 renovation to its store in south Roanoke. Expansion of wine
offerings and a full-service deli were part of the renovation. A grand reopening was held in October 2005.

         United Health Care Services, Inc. is increasing its presence in the valley. The company plans to invest
$1 million in construction and $4 million in machinery and equipment, while adding 250 jobs. Upon expansion,
employment will exceed 400.

        Berglund Auto World is spending $1.5 million on renovations to a former bakery to move and expand its
body shop. The new facility will add 20 jobs.

        Southern Refrigeration Corporation received its Certificate of Occupancy in November 2005 for a new
80,500-square-foot office, warehouse and retail space. Total investment was $2.7 million.




                                                      A-28
        The Rescue Mission of Roanoke continues construction of its $7 million, 30,000-square-foot Women’s and
Children’s Center. In the summer of 2005, $3 million of the construction had been completed. Forty-eight beds
opened in the family shelter and space for another ten women was added to the transient program.

         Quality Coffee and Mountain Spring Water submitted plans in November 2005 for a 12,756-square-foot
addition to the current building. Investment in this addition will be over $500,000.

           New Century Community Church spent over $700,000 renovating a grocery store into their new church
facilities. Construction was completed in November 2004.

         Consolidated Freightways Company, a trucking company, invested $1.3 million in a new terminal near the
airport which was completed in May 2005.

          Vista Properties, LLC completed a 5,600-square-foot addition to its building in Statesman Industrial Park at
a cost of over $500,000 in November 2004.

Major Shopping Malls and Retail Areas

          Valley View Mall, with nearly 900,000 square feet of leasable space and over 150 retail stores, has
continually generated in excess of $3.75 million in local tax revenues annually. Valley View Mall is a regional mall
serving a trade area population of approximately 800,000 and has been a great economic boost to the area by
creating a “retail power center” for shoppers. The surrounding businesses represent a combined investment in
excess of $200 million and investment in new business continues to grow. Additional development in the area
includes an 11,000-square-foot retail center housing Starbucks, Mattress Warehouse and a national cellular company
on a site near the Wal-Mart parking lot. Also nearby, Smokey Bones Barbeque & Grill opened in October 2005, and
both the Official Redskins store and Buffalo Wild Wings opened in December 2005. Sales and Marketing
Management magazine’s 2005 Survey of Buying Power placed the City of Roanoke as 10th in the nation in per
household retail sales.

         Towne Square Shopping Center, near Valley View, has anchors such as Sam’s Wholesale, which added
30,000 square feet and a gasoline station, Comfort Rest and Fashion Bug. Ginger’s Jewelry, a Super Kroger grocery
store and Lowe’s are also located in the area. Ross Dress for Less opened a 30,187-square-foot store, and Mattress
Warehouse opened in April 2005, and Harry’s Clothing opened in July 2005.

Entertainment

         Roanoke offers numerous and diverse entertainment choices which contribute to citizens’ overall quality of
life. The Roanoke Civic Center features the Roanoke Symphony Orchestra, a Broadway show series, and the City’s
professional basketball team, the Roanoke Dazzle. A new exhibit hall, with an estimated cost of $14 million, is
presently under construction at the Civic Center. Across town, the Jefferson Center’s Shaftman Performance Hall
plays host to the Roanoke Ballet and Opera Roanoke as well as other attractions. The Mill Mountain Theatre hosts
numerous events throughout the year and provides a downtown setting perfect for dinner and a night out.

          Residents and tourists alike can learn about the City’s history through the Virginia Transportation Museum,
O. Winston Link Museum and Center in the Square’s History Museum of Western Virginia. Center in the Square
also is home to the Science and Art Museums.

          Festivals such as the St. Patrick’s Day Parade and Celtic Festival, the Strawberry Festival, Local Colors,
Roanoke Festival in the Park, and the Taste of the Blue Ridge Blues & Jazz Festival abound year-round along city
streets, in Elmwood Park, Victory Stadium and Center in the Square. “Movies in the Park” offers families a free
monthly activity on summer evenings in Elmwood Park.




                                                        A-29
          Roanoke’s leisure time also includes a number of concert venues. An annual summer concert series in
Elmwood Park, Party in the Park, features a variety of musical talent at weekly concerts and is sponsored by
Downtown Roanoke, Inc. Another similar downtown event, First Fridays at Five, held the first and third Friday of
each of the spring and summer months, benefits local charities. The Roanoke Civic Center concert series, “Sounds
at Six”, initiated during the summer of 2004, continues to feature a variety of music types in an outdoor setting on
Friday evenings.

                                                                     TAX BASE DATA

          The following data are presented to illustrate the trends and characteristics of the value of taxable property
in Roanoke, property tax rates, tax collection experience, the ten largest holders of real property and taxable retail
sales in the City during recent years.

                                                         Assessed Value of All Taxable Property

                                                                                          Public                Total                 Total
                                                Real                Personal              Service              Assessed          Estimated Actual
Year                                          Property              Property            Corporations            Value                 Value

1996 .........................        $3,098,947,215              $601,120,232          $274,170,157        $3,974,237,604       $4,389,110,963
1997 .........................         3,242,372,927               630,035,420           266,770,541         4,139,178,888        4,580,521,097
1998 .........................         3,363,258,137               634,338,609           262,233,463         4,259,830,209        4,696,815,246
1999 .........................         3,569,735,816               664,808,637           277,115,700         4,511,660,153        4,973,182,727
2000 .........................         3,710,187,437               715,763,594           304,500,512         4,730,451,543        5,223,991,367
2001 .........................         3,843,131,277               737,575,710           339,256,291         4,919,963,278        5,432,186,896
2002 .........................         4,053,218,187               688,540,754           331,442,235         5,073,201,176        5,546,736,293
2003 .........................         4,251,342,652               685,231,130           320,712,924         5,257,286,706        5,722,328,440
2004 .........................         4,558,900,600               675,390,754           372,880,650         5,607,172,004        6,062,851,434
2005 .........................         4,912,403,589               731,086,348           333,486,044         5,976,975,981        6,469,379,840
_______________
Source: City of Roanoke, CAFR as of June 30, 2005.



                                                                     Property Tax Rates
                                                                  (Per $100 Assessed Value)


                                                1996       1997      1998        1999     2000      2001       2002       2003     2004     2005

Real Property..............................     $1.23     $1.23      $1.2251   $1.22      $1.2152   $1.21     $1.21    $1.21      $1.21    $1.21
Personal Property........................        3.45      3.45       3.45      3.45       3.45      3.45      3.45     3.45       3.45     3.45
Public Service Corporations .......              1.23      1.23       1.2251    1.22       1.2152    1.21      1.21     1.21       1.21     1.21

____________
Source: City of Roanoke, CAFR as of June 30, 2005.
1
       The real estate tax rate was $1.23 per $100 of assessed value from July 1, 1997 to December 31, 1997. Effective January 1, 1998, the rate
       became $1.22.
2
       The real estate tax rate was $1.22 per $100 of assessed value from July 1, 1999 to December 31, 1999. Effective January 1, 2000, the rate
       became $1.21.




                                                                               A-30
                                                    General Property Tax Levies and Collections
                                                                                                                Total
                                                                                                             Collection of     % of Current &
                                                                                                              Current &         Delinquent
                                                                Current         % of           Delinquent     Delinquent        Collected to
               Year                    Total Levy              Collections      Levy           Collections      Taxes            Tax Levy

1996............................     $62,745,572             $59,566,959        94.93%         $1,625,306    $61,192,265         97.52%
1997............................      66,282,390              62,066,495        93.64           2,020,693     64,087,188         96.69
1998............................      66,827,109              63,697,526        95.32           1,975,645     65,673,171         98.27
1999............................      70,159,067              67,311,751        95.94           2,312,122     69,623,873         99.24
2000............................      73,493,399              70,188,175        95.50           2,288,511     72,476,686         98.62
2001............................      76,063,428              72,776,631        95.68           2,762,725     75,539,355         99.31
2002............................      76,830,266              74,888,488        97.47           2,795,510     77,683,998        101.11*
2003............................      78,984,813              76,880,908        97.34           3,012,105     79,893,013        101.15*
2004............................      82,947,318              80,387,299        96.91           2,648,525     83,035,824        100.11*
2005............................      88,719,548              86,637,584        97.65           2,887,966     89,525,550        100.91*

____________
Source: City of Roanoke, CAFR as of June 30, 2005.
*
 Collections may exceed levies due to increased collections in the current year of amounts levied in prior years.



                                                                   Ten Largest Taxpayers

         The following data show the assessed value of the real and personal property of the ten largest holders of
real and personal property in the City for the fiscal year ended June 30, 2005.
                                                                                                                             Percentage of
                                                                                                       2005 Assessed         Total Assessed
    Taxpayer                                                                 Description                 Valuation             Valuation

    Appalachian Power Co. ...........................                       Public Utility              $86,105,642              1.44%
    Verizon ....................................................          Communications                 85,902,271              1.44
    Norfolk Southern Railway.......................                        Transportation                76,124,656              1.27
    Carilion....................................................         Healthcare Provider             56,814,598              0.95
    Valley View Mall, LLC...........................                       Shopping Mall                 53,091,185              0.89
    Faison Roanoke Office ............................                     Office Building               27,959,900              0.47
    Johnson and Johnson ...............................                  Lens Manufacturing              25,786,488              0.43
    Roanoke Gas Company ..........................                          Public Utility               25,681,928              0.43
    Times World Corporation .......................                          Newspaper                   22,978,837              0.38
    Maple Leaf Bakery..................................                        Bakery                    21,503,487              0.36
       Total ...................................................                                       $481,948,992              8.06%
_______________
Source: City of Roanoke, Commissioner of the Revenue.




                                                                             A-31
                                                                Taxable Retail Sales

                Calendar
                  Year                                                                             Total Retail Sales

                   1996 ........................................................................     1,399,471,748
                   1997 ........................................................................     1,430,719,230
                   1998 ........................................................................     1,485,135,075
                   1999 ........................................................................     1,563,514,749
                   2000 ........................................................................     1,595,600,205
                   2001 .......................................................................      1,578,043,491
                   2002 .......................................................................      1,588,424,788
                   2003 .......................................................................      1,621,479,275
                   2004 ........................................................................     1,712,570,484
                   2005 through June...................................................                833,791,364
__________________
Source: State Department of Taxation.
Notes: Data exclude prescription drug sales.


                                                          DEBT ADMINISTRATION

          Pursuant to the Constitution of Virginia and the Virginia Public Finance Act of 1991 (Chapter 26 of Title
15.2, Code of Virginia, 1950 (the “Act”)), a city in Virginia is authorized to issue general obligation bonds secured
by a pledge of its full faith and credit. In addition to the authority to issue general obligation bonds pursuant to the
Act, the City is authorized to issue bonds under its Charter provided such issuance is approved at a referendum of
voters in the City. In either case, for the payment of such bonds, the governing body of the City is required to levy, if
necessary, an ad valorem tax on all property in the City subject to local taxation. The issuance by cities in Virginia
of bonds or other interest bearing obligations is subject to a limitation of 10% of the assessed value of real property
in the city subject to taxation as shown by the last preceding assessment for taxes. In determining the limitation,
certain classes of indebtedness may be excluded, including revenue bonds, general obligation bonds payable from a
specific revenue producing undertaking, and revenue anticipation notes maturing in one year or less.

          The City’s debt policy includes the following guidelines: Net debt will not exceed 5% of assessed value of
real estate, non-proprietary general obligation debt service shall not exceed 10% of General Fund expenditures, and
tax-supported debt will be structured in a manner such that not less than 50% of the aggregate outstanding tax-
supported debt will be retired within ten years. The City monitors these ratios to ensure ongoing compliance with
the Debt Policy. Furthermore, the annual budget and financial planning sessions held between City Council and the
administration provides a forum for discussion of the City’s long term capital financing plans.




                                                                             A-32
        The City had outstanding $245,868,345 of general obligation bonds, Virginia Public School Authority
(VPSA) bonds, Qualified Zone Academy Bonds (QZAB), literary loans, and capital leases as of December 31,
2005*, as follows:

                  Public Improvements ........................................................             $112,417,828
                  School Projects .................................................................          84,480,503
                  Public Improvements -Utilities(1) ......................................                   31,160,000
                  Civic Facilities..................................................................          9,800,000
                  Parking Garages................................................................             7,494,474
                  Fleet Management Fund Capital Leases ...........................                              515,540
                   Total................................................................................   $245,868,345
___________
*Unaudited.
(1)
    General Obligation Bonds to be contractually repaid by the Western Virginia Water Authority

         The public improvement, Civic Facilities, and certain school indebtedness shown above is provided from
the General Fund of the City. The Parking Fund covers debt service on garage facilities. If, funding in an
Enterprise Fund is not sufficient to pay debt service, City Council is obligated to make such payment from the
General Fund or from any other available monies.

Legal Debt Margin

            The City’s legal debt margin at December 31, 2005* was $337,300,903 as computed below:

Assessed Value of Real Estate, July 1, 2005 ...........................................                                   $5,435,263,085
Legal Debt Limit, 10% of $5,435,263,085 ..............................................                                       543,526,309
Total Bonded Debt ..................................................................................       245,868,345
Less: Available in Debt Service Fund .....................................................                    (988,465)
  Parking Enterprise Fund Supported Debt ...........................................                        (7,494,474)
  Western Virginia Water Authority Supported Debt ............................                             (31,160,000)     206,225,406
Legal Debt Margin...................................................................................                       $337,300,903
___________
*Unaudited.




Anticipation Notes

On December 22, 2005, the City issued $5,500,000 short-term general obligation bond anticipation notes. These
notes are expected to be repaid with the proceeds of the Series 2006B Bonds. The City has no outstanding short-
term revenue anticipation notes.




                                                                                  A-33
Bond Amortization Schedules
         Total principal and interest payments to retire all outstanding general obligation bonded indebtedness of the
City as of December 31, 2005 are shown in the following tables:

                                    General Obligation Tax-Supported Indebtedness *
                 Currently Outstanding (December 31, 2005)                 Current Issue
  Fiscal Year     Principal       Interest      Subtotal       Principal     Interest               Subtotal           Total
       2006      $ 3,420,443    $ 4,868,810   $ 8,289,253                -             -                      -     $ 8,289,253
       2007        15,503,051     8,445,962     23,949,013    $ 1,910,000   $ 1,313,867             $ 3,223,867       27,172,880
       2008        15,615,739     7,861,422     23,477,161      1,925,000     1,255,346               3,180,346       26,657,507
       2009        15,856,901     7,263,289     23,120,190      1,930,000     1,186,596               3,116,596       26,236,786
       2010        16,096,846     6,642,220     22,739,066      1,940,000     1,117,671               3,057,671       25,796,737
       2011        15,257,634     6,029,741     21,287,375      1,945,000     1,040,071               2,985,071       24,272,446
       2012        15,443,408     5,428,709     20,872,117      1,435,000       962,271               2,397,271       23,269,388
       2013        15,616,829     4,811,599     20,428,428      1,445,000       909,221               2,354,221       22,782,649
       2014        15,078,228     4,153,877     19,232,105      1,455,000       851,421               2,306,421       21,538,526
       2015        11,665,134     3,543,558     15,208,692      1,465,000       793,221               2,258,221       17,466,913
       2016        10,266,359     3,014,847     13,281,206      1,475,000       737,596               2,212,596       15,493,802
       2017        10,067,840     2,523,817     12,591,657      1,485,000       678,596               2,163,596       14,755,253
       2018         9,898,049     2,057,383     11,955,432      1,495,000       606,821               2,101,821       14,057,253
       2019         9,056,032     1,596,887     10,652,919      1,510,000       546,678               2,056,678       12,709,597
       2020         8,884,343     1,170,825     10,055,168      1,520,000       483,528               2,003,528       12,058,696
       2021         6,040,385       827,663      6,868,048      1,540,000       419,978               1,959,978        8,828,026
       2022         5,436,408       558,299      5,994,707      1,555,000       342,978               1,897,978        7,892,685
       2023         2,718,593       364,982      3,083,575      1,575,000       276,428               1,851,428        4,935,003
       2024         2,757,157       241,193      2,998,350      1,595,000       208,078               1,803,078        4,801,428
       2025         2,534,492       110,508      2,645,000      1,620,000       140,263               1,760,263        4,405,263
       2026                 -              -             -      1,635,000        70,450               1,705,450        1,705,450
Totals           $207,213,871   $71,515,591 $278,729,462      $32,455,000 $13,941,079              $46,396,079      $325,125,541
___________
*Includes Public Improvement Bonds for the City and School Board, Virginia Public School Authority Bonds, Literary Fund
Loan Bonds, and Qualified Zone Academy Bonds, Civic Facilities General Obligation Bonds, and Fleet Management Fund
Capital Leases. Does not include $5.5 million General Obligation Bond Anticipation Notes issued on December 22, 2005.

                        Parking Enterprise Fund Supported General Obligation Indebtedness
                Currently Outstanding (December 31, 2005)               Current Issue
 Fiscal Year     Principal     Interest      Subtotal     Principal      Interest      Subtotal                  Total

     2006           $55,000     $175,797         $230,797              -                -             -      $   230,797
     2007           619,113       336,823          955,936     $ 90,000        $ 105,267     $ 195,267         1,151,203
     2008           661,144       306,949          968,093        95,000          103,305       198,305        1,166,398
     2009           698,514       274,458          972,972        95,000           99,980       194,980        1,167,952
     2010           750,883       239,848          990,731       100,000           96,655       196,655        1,187,386
     2011           798,591       203,261        1,001,852       100,000           92,655       192,655        1,194,507
     2012           851,229       164,864        1,016,093       105,000           88,655       193,655        1,209,748
     2013           205,000       141,044          346,044       110,000           84,849       194,849          540,893
     2014           220,000       132,831          352,831       115,000           80,449       195,449          548,280
     2015           230,000       123,966          353,966       120,000           75,849       195,849          549,815
     2016           240,000       113,000          353,000       120,000           71,349       191,349          544,349
     2017           250,000       101,300          351,300       125,000           66,549       191,549          542,849
     2018           265,000        88,850          353,850       130,000           60,299       190,299          544,149
     2019           285,000        75,350          360,350       135,000           55,099       190,099          550,449
     2020           300,000        60,850          360,850       145,000           49,699       194,699          555,549
     2021           315,000        46,562          361,562       150,000           43,898       193,898          555,460
     2022           330,000        30,700          360,700       155,000           36,398       191,398          552,098
     2023           135,000        19,600          154,600       165,000           30,005       195,005          349,605
     2024           140,000        13,525          153,525       175,000           23,075       198,075          351,600
     2025           145,000         6,525          151,525       180,000           15,725       195,725          347,250
     2026                 -             -                -       190,000            8,075       198,075          198,075
Totals           $7,494,474    $2,656,103      $10,150,577    $2,600,000       $1,287,835    $3,887,835      $14,038,412


                                                          A-34
                       General Obligation Indebtedness to be Paid Contractually by Western Virginia Water Authority
                                                         as of December 31, 2005
                                    Fiscal Year                 Principal          Interest         Subtotal

                                         2006                             $0           $ 690,576                $ 690,576
                                         2007                       2,285,000          1,333,660                3,618,660
                                         2008                       2,295,000          1,236,666                3,531,666
                                         2009                       2,305,000          1,134,891                3,439,891
                                         2010                       2,320,000          1,031,554                3,351,554
                                         2011                       2,330,000            923,441                3,253,441
                                         2012                       2,360,000            808,666                3,168,666
                                         2013                       2,390,000            692,373                3,082,373
                                         2014                       2,410,000            574,604                2,984,604
                                         2015                         995,000            491,451                1,486,451
                                         2016                       1,055,000            448,385                1,503,385
                                         2017                       1,105,000            408,093                1,513,093
                                         2018                       1,150,000            363,663                1,513,663
                                         2019                       1,195,000            315,693                1,510,693
                                         2020                       1,250,000            265,100                1,515,100
                                         2021                       1,310,000            210,431                1,520,431
                                         2022                       1,365,000            151,619                1,516,619
                                         2023                         975,000            102,100                1,077,100
                                         2024                       1,010,000             62,400                1,072,400
                                         2025                       1,055,000             21,100                1,076,100
                                         Totals                   $31,160,000        $11,266,466              $42,426,466

          Debt Ratios

                  The following data is presented to show trends in the relationship of the net general obligation bonded
          indebtedness of the City to its estimated population and to the assessed value of taxable property in the City.

                                 Ratio of Net General Obligation Bonded Debt to the Assessed Value
                             of Taxable Property and Net Bonded Debt Per Capita Last Ten Fiscal Years
                                                                                                                                    Net
                                                                                                  Amount                          Bonded
                                                          Debt Payable          Bonds             Available                       Debt as a        Net
                         Total                               from           Supported by           In Debt          Net         Percentage of    Bonded
Fiscal                  Assessed        Gross Bonded       Enterprise      Western Virginia        Service         Bonded         Assessed         Debt
Year     Population      Value             Debt            Funds (a)      Water Authority (b)       Fund            Debt           Value        Per Capita

1996      95,479      $3,974,237,604   $149,450,742      $48,695,000                   -        $ 8,797,456      $ 91,958,286       2.31%       $ 963
1997      94,931       4,139,178,888    146,159,015       46,725,000                   -          9,148,331        90,285,684       2.18           951
1998      93,797       4,259,830,209    157,555,231       44,806,346                   -        11,336,503        101,412,382       2.38         1,081
1999      93,357       4,511,660,153    157,175,592       43,175,028                   -        11,498,954        102,501,610       2.27         1,097
2000      94,911       4,730,451,543    193,100,761       41,118,710                   -        13,134,073        138,847,978       2.94         1,462
2001      95,000       4,919,963,278    191,284,376       39,027,391                   -        13,130,315        139,126,670       2.83         1,464
2002      94,600       5,113,520,556    242,386,234       47,001,072                   -        14,289,750        181,095,412       3.54         1,914
2003      93,100       5,253,344,267    228,050,952       44,517,751                   -        14,436,613        169,096,588       3.22         1,816
2004      92,600       5,607,172,004    223,671,734       41,504,678                   -        15,061,934        167,105,122       2.98         1,805
2005      92,600       5,976,975,981    256,369,208        7,818,130         $33,435,000            988,465       214,127,613       3.58         2,312
          __________________
          Source: City of Roanoke CAFR June 30, 2005.
          (a) FY04 and FY05 excludes Civic Facilities outstanding balances.
          (b) The Authority was formed July 1, 2004. While the City’s assets related to its Drinking Water and Waste Water Enterprise
          Funds were transferred to the Authority, the City’s related General Obligation Bonds could not be assumed by the Authority.
          Under its Operating Agreement, the Authority agreed to pay the City amounts sufficient to pay debt service on the General
          Obligation Bonds, and to fix, charge and collect rates, fees and charges sufficient to pay operating expenses and debt service on
          the City’s affected General Obligation Bonds.


                                                                         A-35
                                            CAPITAL IMPROVEMENT PROGRAM -
                                           FUTURE BORROWING REQUIREMENTS

          Prior to adoption of the annual capital and operating budgets, the City Manager presents a capital
improvement program (“CIP”) to City Council. In development of this plan, particular attention is focused upon the
first year of the plan since it subsequently will be considered as the City Manager’s capital budget request for the
ensuing fiscal year. The CIP presents information on each project in detail.

        The current CIP covers the fiscal years 2006 through 2010, and provides for the following proposed
expenditures and projected sources of funding as presented in the following tables:

                                 Capital Improvement Program Fiscal Year(s) 2006-2010
                                          Summary of Estimated Expenditures

                                                          Fiscal Year(s) Ending June 30


                             Project Classification                               2006                    2007-2010           Total Cost

                     Public Buildings ..............................            $8,929,160              $6,371,957          $15,301,117
                     Economic Development ..................                    14,632,087               2,215,000           16,847,087
                     Flood Reduction ..............................              5,446,352              49,864,249           55,310,601
                     Parks................................................       2,000,990               8,650,393           10,651,383
                     Public Schools.................................            21,250,000              54,095,000           75,345,000
                     Stormwater Management ................                      2,245,036                       0            2,245,036
                     Streets, Sidewalks and Bridges .......                      5,220,069              44,816,510           50,036,579
                     Civic Facilities ................................          13,072,523              14,749,385           27,821,908
                     Parking Facilities.............................             4,115,600               2,600,000            6,715,600
                     Technology......................................            1,150,570              $2,600,000            3,750,570
                                                                               $78,062,387            $185,962,494         $264,024,881



                  Sources of Funds:                                                                                   FY 2006 – 2010

                  Existing/Future Capital Funds...........................................................               $17,935,664
                  Sale of Property.................................................................................        2,003,480
                  State Literary Fund Loans/VPSA Bonds...........................................                         35,000,000
                  Intergovernmental Funding ...............................................................               86,780,003
                  General Revenue ...............................................................................          5,638,801
                  Third Party Funding ..........................................................................             657,646
                  General Obligation Bond Issues........................................................                 111,414,287
                  Capital Project Reserve - Schools .....................................................                  4,595,000
                                                                                                                        $264,024,881


                                                 EMPLOYEE RETIREMENT PLANS

         The City of Roanoke Pension Plan (Pension Plan) covers all City employees except for professional School
Board employees and employees of the Roanoke Sheriff’s Department who participate in the Virginia Retirement
System (VRS). The Pension Plan is a defined benefit plan established by City Council and is included in the City’s
financial statements as the Pension Trust Fund. The Pension Plan consists of the Employee’s Retirement System
(ERS) for employees hired before July 1, 1984 and the Employee’s Supplemental Retirement System (ESRS) for
employees hired on or after July 1, 1984. City employees do not contribute to the Pension Plan. The City’s
contribution rate is based on an actuarially determined amount. The Pension Plan received employer contributions
of $4,614,932 in fiscal year 2004 and $5,477,515 in fiscal year 2005.


                                                                             A-36
        Contribution rates for the most recent five years are as follows:

                           Year ended June 30, 2001 ..........................   6.25%
                           Year ended June 30, 2002 ..........................   6.25
                           Year ended June 30, 2003 ..........................   6.25
                           Year ended June 30, 2004 ..........................   7.59
                           Year ended June 30, 2005 ..........................   9.56

         Retirement benefits for employees who are in the ERS are determined as a percentage of the highest twelve
consecutive months of salary based on years of creditable service. Normal retirement age is age 60 or 30 years of
service. The Pension Plan provides for early retirement after 20 years of service whereby employees receive a
reduced retirement benefit.

         Retirement benefits within the ESRS are determined as a percentage of the average of the highest 36
consecutive months of salary based on years of creditable service. For most employees, normal retirement age is
age 50 with age and service equal to 80. Normal retirement age for firefighters and police officers is age 45 with
age and service equal to 70. The system also provides for early retirement. Employees are vested after five years of
creditable service.

         The liability for unfunded accrued liabilities for the City of Roanoke Pension Plan is being amortized over
a period of 20 years from the date of establishment. At June 30, 2005, the latest valuation date, the amount of
unfunded actuarial accrued liability was $47,555,924. The pension benefit obligation of $341,392,811 exceeded the
market value of net assets available for benefits of $318,675,367 by $22,717,444.

        The Virginia Retirement System (VRS) is administered by the Commonwealth of Virginia. Professional
School Board employees and Sheriff’s employees participate in VRS. Contribution rates, which are actuarially
determined by the VRS, are intended to fund normal cost plus amortization of unfunded accrued liabilities over not
more than a thirty year period. Employee contribution rates, which are paid by the employer, remain constant at five
percent of covered payroll. The City assumes the employees’ share of these contributions. For the year ended
June 30, 2005, the City contributed $898,957 on behalf of Sheriff’s employees, and the Schools contributed
$7,357,418 on behalf of its employees, representing all required employer and employee contributions.

         See Note 12 to the financial statements included herein in Appendix C for more detailed information on the
retirement systems as of the June 30, 2005 valuation date.




                                                            A-37
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           A-38
APPENDIX B
[This Page Intentionally Left Blank]
APPENDIX C
                                                                                                       APPENDIX D



                          [PROPOSED FORMS OF OPINIONS OF BOND COUNSEL]




The Honorable Mayor and Council
of the City of Roanoke, Virginia
Roanoke, Virginia

Dear Mayor and Councilmembers:

                                    CITY OF ROANOKE, VIRGINIA,
                          GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS,
                                      SERIES 2006A, $29,555,000

                   At your request we have examined into the validity of an issue of Twenty-Nine Million Five
Hundred Fifty-Five Thousand Dollars ($29,555,000) principal amount of General Obligation Public Improvement
Bonds, Series 2006A (the “Bonds”), of the City of Roanoke, Virginia (the “City”). The Bonds are dated their date
of delivery; are issued in fully registered form in the denomination of $5,000 each or any whole multiple thereof;
and are numbered from No. R-1 upwards in order of issuance. The Bonds mature on February 1 in each of the years
and in the principal amounts set forth below, with the Bonds maturing in a particular year bearing interest from their
date payable on August 1, 2006 and semiannually on each February 1 and August 1 thereafter at the rate per annum
set forth opposite such year, to wit:

                 Year of         Principal      Interest         Year of     Principal      Interest
                 Maturity         Amount         Rate            Maturity     Amount         Rate

                   2007        $1,725,000        4.50 %           2017      $1,335,000      5.00 %
                   2008         1,745,000        3.50             2018       1,350,000      4.00
                   2009         1,750,000        3.50             2019       1,370,000      4.00
                   2010         1,765,000        4.00             2020       1,390,000      4.00
                   2011         1,770,000        4.00             2021       1,415,000      5.00
                   2012         1,265,000        3.625            2022       1,435,000      4.125
                   2013         1,280,000        4.00             2023       1,465,000      4.20
                   2014         1,295,000        4.00             2024       1,495,000      4.20
                   2015         1,310,000        3.75             2025       1,525,000      4.25
                   2016         1,320,000        4.00             2026       1,550,000      4.25


                   The Bonds maturing on and after February 1, 2017 are subject to redemption at the option of the
City prior to their stated maturities on or after February 1, 2016 upon the terms and conditions and at the prices
stated therein.

                  The Bonds recite that they are issued for the purpose of providing funds to pay the costs of
acquisition, construction, reconstruction, improvement, extension, enlargement and equipping of various public
improvement projects of and for the City, under and pursuant to and in full compliance with the Constitution and
statutes of the Commonwealth of Virginia, including Chapter 26 of Title 15.2 of the Code of Virginia, 1950 (the
same being the Public Finance Act of 1991), and resolutions and other proceedings of the Council of the City duly
adopted and taken under the Public Finance Act of 1991.


                                                           D-1
                    We have examined (i) the Constitution and statutes of the Commonwealth of Virginia,
(ii) certified copies of the aforementioned resolutions and other proceedings of the Council of the City in connection
with the authorization, issuance, sale and delivery of the Bonds, (iii) such other papers, instruments, documents and
proceedings as we have deemed to be necessary or advisable and (iv) an executed and authenticated Bond of such
issue.

                  In our opinion, the Bonds have been duly authorized and issued in accordance with the
Constitution and statutes of the Commonwealth of Virginia and constitute valid and legally binding obligations of
the City, and the City Council of the City is authorized and required to levy and collect annually, at the same time
and in the same manner as other taxes of the City are assessed, levied and collected, a tax upon all taxable property
within the City, over and above all other taxes, authorized or limited by law and without limitation as to rate or
amount, sufficient to pay when due the principal of and interest on the Bonds to the extent other funds of the City
are not lawfully available and appropriated for such purpose.

                  It is to be understood that the rights of the holders of the Bonds and the enforceability thereof may
be subject to judicial discretion, to the exercise of the sovereign police powers of the Commonwealth of Virginia
and the constitutional powers of the United States of America and to valid bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the relief of debtors.

                  In our opinion, under existing statutes and court decisions, interest on the Bonds (i) is excluded
from gross income for federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986
(the “Code”), and (ii) is not treated as an item of tax preference for purposes of the alternative minimum tax imposed
on individuals and corporations under the Code; such interest, however, is included in the adjusted current earnings
of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. In
rendering our opinion, we have relied on certain representations, certifications of fact and statements of reasonable
expectations made by the City in connection with the Bonds, and we have assumed compliance by the City with
certain ongoing covenants to comply with applicable requirements of the Code to assure the exclusion of interest on
the Bonds from gross income under Section 103 of the Code.

                  It is our opinion that, for any Bond having original issue discount (a “Discount Bond”), original
issue discount that has accrued and is properly allocable to the owners of the Discount Bonds under Section 1288 of
the Code is excludable from gross income for federal income tax purposes to the same extent as other interest on the
Bonds.

                  It is also our opinion that, under the existing statutes of the Commonwealth of Virginia, interest on
the Bonds is not includable in computing the Virginia income tax.

                  We express no opinion regarding other federal or Commonwealth of Virginia tax consequences
arising with respect to the Bonds. We are rendering our opinion under existing statutes and court decisions as of the
issue date of the Bonds, and we assume no obligation to update our opinion after the issue date of the Bonds to
reflect any future action, fact or circumstance, or change in law or interpretation, or otherwise. We express no
opinion on the effect of any action taken in reliance upon an opinion of other counsel on the exclusion from gross
income for federal income tax purposes of interest on the Bonds.

                                                                         Very truly yours,




                                                         D-2
The Honorable Mayor and Council
of the City of Roanoke, Virginia
Roanoke, Virginia

Dear Mayor and Councilmembers:

                                    CITY OF ROANOKE, VIRGINIA,
                          GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS,
                                       SERIES 2006B, $5,500,000

                   At your request we have examined into the validity of an issue of Five Million Five Hundred
Thousand Dollars ($5,500,000) principal amount of General Obligation Public Improvement Bonds, Series 2006B
(the “Bonds”), of the City of Roanoke, Virginia (the “City”). The Bonds are dated their date of delivery; are issued
in fully registered form in the denomination of $5,000 each or any whole multiple thereof; and are numbered from
No. R-1 upwards in order of issuance. The Bonds mature on February 1 in each of the years and in the principal
amounts set forth below, with the Bonds maturing in a particular year bearing interest from their date payable on
August 1, 2006 and semiannually on each February 1 and August 1 thereafter at the rate per annum set forth
opposite such year, to wit:

                 Year of        Principal      Interest         Year of    Principal      Interest
                 Maturity        Amount         Rate            Maturity    Amount         Rate

                   2007         $275,000         4.00%           2017      $275,000         4.10 %
                   2008          275,000         4.00            2018       275,000         4.125
                   2009          275,000         4.00            2019       275,000         5.00
                   2010          275,000         4.00            2020       275,000         5.00
                   2011          275,000         4.00            2021       275,000         5.00
                   2012          275,000         4.00            2022       275,000         5.00
                   2013          275,000         4.00            2023       275,000         5.00
                   2014          275,000         4.00            2024       275,000         4.50
                   2015          275,000         4.00            2025       275,000         4.60
                   2016          275,000         4.00            2026       275,000         4.60

                  The Bonds maturing on and after February 1, 2017 are subject to redemption at the option of the
City prior to their stated maturities on or after February 1, 2016 upon the terms and conditions and at the prices
stated therein.

                  The Bonds recite that they are issued for the purpose of providing funds to be granted by the City
to the Roanoke Redevelopment and Housing Authority (the “Authority”) for the purpose of assisting the Authority
in paying a portion of the costs of a redevelopment project in the City, known as the South Jefferson Redevelopment
Project, under and pursuant to and in full compliance with the Constitution and statutes of the Commonwealth of
Virginia, including Chapter 26 of Title 15.2 of the Code of Virginia, 1950 (the same being the Public Finance Act of
1991), and resolutions and other proceedings of the Council of the City duly adopted and taken under the Public
Finance Act of 1991.




                                                          D-3
                    We have examined (i) the Constitution and statutes of the Commonwealth of Virginia,
(ii) certified copies of the aforementioned resolutions and other proceedings of the Council of the City in connection
with the authorization, issuance, sale and delivery of the Bonds, (iii) such other papers, instruments, documents and
proceedings as we have deemed to be necessary or advisable and (iv) an executed and authenticated Bond of such
issue.

                  In our opinion, the Bonds have been duly authorized and issued in accordance with the
Constitution and statutes of the Commonwealth of Virginia and constitute valid and legally binding obligations of
the City, and the City Council of the City is authorized and required to levy and collect annually, at the same time
and in the same manner as other taxes of the City are assessed, levied and collected, a tax upon all taxable property
within the City, over and above all other taxes, authorized or limited by law and without limitation as to rate or
amount, sufficient to pay when due the principal of and interest on the Bonds to the extent other funds of the City
are not lawfully available and appropriated for such purpose.

                  It is to be understood that the rights of the holders of the Bonds and the enforceability thereof may
be subject to judicial discretion, to the exercise of the sovereign police powers of the Commonwealth of Virginia
and the constitutional powers of the United States of America and to valid bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the relief of debtors.

                    In our opinion, under existing statutes and court decisions, interest on the Bonds (i) is excluded
from gross income for federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986
(the “Code”), except that no opinion is expressed as to such exclusion of interest on any Bond for any period during
which such Bond is held by a person who, within the meaning of Section 147(a) of the Code, is a “substantial user”
of the facilities financed with the proceeds of the Bonds or a “related person”, and (ii) is treated as an item of tax
preference for purposes of the alternative minimum tax imposed on individuals and corporations under the Code. In
rendering our opinion, we have relied on certain representations, certifications of fact and statements of reasonable
expectations made by the City and the Authority in connection with the Bonds, and we have assumed compliance by
the City and the Authority with certain ongoing covenants to comply with applicable requirements of the Code to
assure the exclusion of interest on the Bonds from gross income under Section 103 of the Code.

                  It is our opinion that, for any Bond having original issue discount (a “Discount Bond”), original
issue discount that has accrued and is properly allocable to the owners of the Discount Bonds under Section 1288 of
the Code is excludable from gross income for federal income tax purposes to the same extent as other interest on the
Bonds.

                  It is also our opinion that, under the existing statutes of the Commonwealth of Virginia, interest on
the Bonds is not includable in computing the Virginia income tax.

                  We express no opinion regarding other federal or Commonwealth of Virginia tax consequences
arising with respect to the Bonds. We are rendering our opinion under existing statutes and court decisions as of the
issue date of the Bonds, and we assume no obligation to update our opinion after the issue date of the Bonds to
reflect any future action, fact or circumstance, or change in law or interpretation, or otherwise. We express no
opinion on the effect of any action taken in reliance upon an opinion of other counsel on the exclusion from gross
income for federal income tax purposes of interest on the Bonds.

                                                                         Very truly yours




                                                         D-4
                                                                                                      APPENDIX E

                         DESCRIPTION OF THE DEPOSITORY TRUST COMPANY
                                  AND THE BOOK-ENTRY SYSTEM

                 The description which follows of the procedures and recordkeeping with respect to
beneficial ownership interests in the Bonds, payments of principal of and premium, if any, and interest on the
Bonds to The Depository Trust Company (“DTC”), New York, New York, its nominee, Participants, defined
below, or Beneficial Owners, defined below, confirmation and transfer of beneficial ownership interests in the
Bonds and other related transactions by and among DTC, Participants and Beneficial Owners is based solely
on information furnished by DTC.

         DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities
registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an
authorized representative of DTC. One fully-registered Bond will be issued for each maturity of each series of the
Bonds, and will be deposited with DTC.

          DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York
Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code,
and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity, corporate and
municipal debt issues, and money market instruments from over 100 countries that DTC’s participants (“Direct
Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales
and other securities transactions in deposited securities through electronic computerized book-entry transfers and
pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The
Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of
DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and
Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by The
New York Stock Exchange, Inc., the American Stock Exchange LLC and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers
and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest
rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange
Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

         Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will
receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond
(“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners
will not receive written confirmation from DTC of their purchases. Beneficial Owners are, however, expected to
receive written confirmations providing details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their
ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is
discontinued.

         To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the
name of DTC’s partnership nominee, Cede & Co. or such other name as may be requested by an authorized
representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such
other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial

                                                         E-1
Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such
Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will
remain responsible for keeping account of their holdings on behalf of their customers.

         Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to
Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

       Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed,
DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be
redeemed.

         Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds
unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC
mails an Omnibus Proxy to the City as Issuer as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on
the record date (identified in a listing attached to the Omnibus Proxy).

         Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct
Participants’ accounts, upon DTC’s receipt of funds and corresponding detail information from the City as Issuer or
the Registrar and Paying Agent on payable date in accordance with their respective holdings shown on DTC’s
records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with Bonds held for the accounts of customers in bearer form or registered in “street name”,
and will be the responsibility of such Participant and not of DTC, the City as Issuer or the Registrar and Paying
Agent subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of
redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be
requested by an authorized representative of DTC) is the responsibility of the City as Issuer or the Registrar and
Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect
Participants.

          DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving
reasonable notice to the City as Issuer or to the Registrar and Paying Agent. Under such circumstances, in the event
that a successor Bonds depository is not obtained, Bond certificates are required to be printed and delivered.

         The City as Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC
(or a successor Bonds depository). In that event, Bond certificates will be printed and delivered to DTC.

         The information in this Appendix E concerning DTC and DTC’s book-entry system has been obtained from
sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.




                                                         E-2
                                                                                                        APPENDIX F

                                 CONTINUING DISCLOSURE CERTIFICATE


                  This Continuing Disclosure Certificate (the “Certificate”), dated as of February 1, 2006, is
executed and delivered in connection with the issuance by the City of Roanoke, Virginia (the “City”), of
$29,555,000 principal amount of General Obligation Public Improvement Bonds, Series 2006A (the “Series 2006A
Bonds”), and $5,500,000 principal amount of General Obligation Public Improvement Bonds, Series 2006B (the
“Series 2006B Bonds”, and collectively with the Series 2006A Bonds, the “Bonds”), and pursuant to resolutions
duly adopted by the Council of the City on June 16, 2003, March 15, 2004 and June 20, 2005, respectively (such
resolutions being referred to herein collectively as the “Resolution”). Capitalized terms used in this Certificate shall
have the respective meanings specified above or in Article I hereof. Pursuant to the Resolution, the City agrees as
follows:

                                                     ARTICLE I

                                                      Definitions

                  SECTION 1.1.      Definitions.    The following terms used in this Certificate shall have the
following respective meanings:

                  “Annual Financial Information” means, collectively, (i) updated versions of the following
financial information and operating data with respect to the City for each fiscal year of the type contained in
Appendix A to the Official Statement under the headings “GENERAL FUND REVENUES AND EXPENDITURES”,
“SUMMARY OF GENERAL FUND REVENUES AND EXPENDITURES”, “TAX BASE DATA” (including the tables “Assessed
Value of All Taxable Property”, “Property Tax Rates (Per $100 Assessed Value)”, “General Property Tax Levies
and Collections”, “Ten Largest Taxpayers” and “Taxable Retail Sales” therein), “DEBT ADMINISTRATION”
(including the information under the subheadings “Bond Amortization Schedules” and “Debt Ratios” therein),
“CAPITAL IMPROVEMENT PROGRAM - FUTURE BORROWING REQUIREMENTS”, “EMPLOYEE RETIREMENT PLANS” and
information contained in Appendix C to the Official Statement and (ii) information regarding amendments to this
Certificate required pursuant to Sections 4.2(c) and (d) of this Certificate. Annual Financial Information shall
include Audited Financial Statements, if available, or Unaudited Financial Statements.

                  The descriptions contained in clause (i) above of financial information and operating data
constituting Annual Financial Information are of general categories of financial information and operating data.
When such descriptions include information that no longer can be generated because the operations to which it
related have been materially changed or discontinued, a statement to that effect shall be provided in lieu of such
information. Any Annual Financial Information containing modified financial information or operating data shall
explain, in narrative form, the reasons for the modification and the impact of the modification on the type of
financial information or operating data being provided.

                  “Audited Financial Statements” means the annual financial statements, if any, of the City, audited
by such auditor as shall then be required or permitted by State law and the Resolution. Audited Financial
Statements shall be prepared in accordance with GAAP for governmental units as prescribed by GASB; provided,
however, that the City may from time to time, if required by federal or State legal requirements, modify the
accounting principles to be followed in preparing its financial statements. Notice of any such modification shall be
provided to each NRMSIR and the SID, and shall include a reference to the specific federal or State law or
regulation describing such accounting basis.

                  “Counsel” means Hawkins Delafield & Wood LLP or other nationally recognized bond counsel or
counsel expert in federal securities laws, in each case acceptable to the City.




                                                          F-1
                   “GAAP” means generally accepted accounting principles as prescribed from time to time for
governmental units by GASB, the Financial Accounting Standards Board, or any successor to the duties and
responsibilities of either of them.

                   “GASB” means the Governmental Accounting Standards Board, or any successor to the duties and
responsibilities thereof.

                  “Material Event” means any of the following events with respect to the Bonds, whether relating to
the City or otherwise, if material:

                            (i)      principal and interest payment delinquencies;
                            (ii)     non-payment related defaults;
                            (iii)    unscheduled draws on debt service reserves reflecting financial difficulties;
                            (iv)     unscheduled draws on credit enhancements reflecting financial difficulties;
                            (v)      substitution of credit or liquidity providers, or their failure to perform;
                            (vi)     adverse tax opinions or events affecting the tax-exempt status of the security;
                            (vii)    modifications to rights of security holders;
                            (viii)   bond calls (other than scheduled mandatory sinking fund redemptions);
                            (ix)     defeasances;
                            (x)      release, substitution or sale of property securing repayment of the securities; and
                            (xi)     rating changes.

                  “MSRB” means the Municipal Securities Rulemaking Board established pursuant to the
provisions of Section 15B(b)(1) of the Securities Exchange Act of 1934.

                  “NRMSIR” means, at any time, a then-existing nationally recognized municipal securities
information repository, as recognized from time to time by the SEC for the purposes referred to in the Rule. The
NRMSIRs as of the date of this Certificate are Bloomberg Municipal Repository, DPC Data Inc., FT Interactive
Data and Standard & Poor’s Securities Evaluations, Inc. Filing information relating to such NRMSIRs is set forth in
Exhibit A hereto.

                    “Official Statement” means the Official Statement of the City relating to the Bonds, dated
January 26, 2006.

                   “Rule” means Rule 15c2-12 promulgated by the SEC under the Securities and Exchange Act of
1934 as amended (17 CFR Part 240, §240.15c2-12), as in effect on the date of this Certificate, including any official
interpretations thereof issued either before or after the effective date of this Certificate which are applicable to this
Certificate.

                    “SEC” means the United States Securities and Exchange Commission.

                    “SID” means, at any time, a then-existing State information depository, if any, as operated or
designated as such by or on behalf of the State for the purposes referred to in the Rule. As of the date of this
Certificate, there is no SID established for the State.

                    “State” means the Commonwealth of Virginia.

                  “Unaudited Financial Statements” means the same as Audited Financial Statements, except the
same shall not have been audited.

                 “Underwriters” means the underwriters of the Series 2006A Bonds, for whom Wachovia Bank,
National Association, is representative, and the underwriters of the Series 2006B Bonds, for whom UBS Securities
LLC is representative.




                                                          F-2
                                                   ARTICLE II

                                                 The Undertaking

                  SECTION 2.1. Purpose. This Certificate shall constitute a written undertaking for the benefit of
the holders of the Bonds, and is being executed and delivered solely to assist the Underwriters in complying with
paragraph (b)(5) of the Rule.

                   SECTION 2.2. Annual Financial Information. (a) The City shall provide Annual Financial
Information for the City with respect to each fiscal year of the City, commencing with fiscal year beginning July 1,
2005, by no later than six months after the end of the respective fiscal year, to each NRMSIR and the SID.

                 (b) The City shall provide, in a timely manner, notice of any failure of the City to provide the
Annual Financial Information by the date specified in subsection (a) above to each NRMSIR, to the MSRB and to
the SID.

                  SECTION 2.3. Audited Financial Statements. If not provided as part of Annual Financial
Information by the dates required by Section 2.2(a) hereof, the City shall provide Audited Financial Statements,
when and if available, to each NRMSIR and the SID.

                 SECTION 2.4. Material Event Notices. (a) If a Material Event occurs, the City shall provide,
in a timely manner, a notice of such Material Event to each NRMSIR, to the MSRB and to the SID.

                   (b) Any such notice of a defeasance of Bonds shall state whether the Bonds have been escrowed
to maturity or to an earlier redemption date and the timing of such maturity or redemption.

                  SECTION 2.5. Additional Disclosure Obligations. The City acknowledges and understands that
other State and federal laws, including but not limited to the Securities Act of 1933 and SEC Rule 10b-5
promulgated under the Securities Exchange Act of 1934, may apply to the City, and that, under some circumstances
compliance with this Certificate, without additional disclosures or other action, may not fully discharge all duties
and obligations of the City under such laws.

                  SECTION 2.6. Additional Information. Nothing in this Certificate shall be deemed to prevent
the City from disseminating any other information, using the means of dissemination set forth in this Certificate or
any other means of communication, or including any other information in any Annual Financial Information or
notice of a Material Event, in addition to that which is required by this Certificate. If the City chooses to include
any information in any Annual Financial Information or Material Event Notice in addition to that which is
specifically required by this Certificate, the City shall have no obligation under this Certificate to update such
information or include it in any future Annual Financial Information or notice of a Material Event hereunder.

                  SECTION 2.7. No Previous Non-Compliance. The City represents that in the previous five
years it has not failed to comply in any material respect with any previous undertaking in a written contract or
agreement specified in paragraph (b)(5)(i) of the Rule.

                                                   ARTICLE III

                                                 Operating Rules

                  SECTION 3.1. Reference to Other Documents. It shall be sufficient for purposes of Section 2.2
hereof if the City provides Annual Financial Information by specific reference to documents (i) either (1) provided
to each NRMSIR existing at the time of such reference and the SID or (2) filed with the SEC or (ii) if such a
document is a “final official statement” as defined in paragraph (f)(3) of the Rule, available from the MSRB.

                SECTION 3.2. Submission of Information. Annual Financial Information may be provided in
one document or multiple documents, and at one time or in part from time to time.


                                                        F-3
                  SECTION 3.3. CUSIP Numbers in Material Event Notices. Each Material Event Notice
relating to the Bonds shall include the CUSIP numbers of the Bonds to which such Material Event Notice relates or,
if the Material Event Notice relates to all bond issues of the City including the Bonds, such Material Event Notice
need only include the CUSIP number of the City.

                  SECTION 3.4. Filing with Certain Dissemination Agents or Conduits. The City may satisfy its
obligations hereunder to file any notice, document or information with a NRMSIR or SID (i) solely by transmitting
such filing to the Texas Municipal Advisory Council (the “MAC”) as provided at http://www.disclosureusa.org
unless the SEC has withdrawn the interpretive advice in its letter to the MAC dated September 7, 2004, or (ii) by
filing the same with any dissemination agent or conduit, including any “central post office” or similar entity,
assuming or charged with responsibility for accepting notices, documents or information for transmission to such
NRMSIR or SID, to the extent permitted by the SEC or SEC staff or required by the SEC. For this purpose,
permission shall be deemed to have been granted by the SEC staff if and to the extent the agent or conduit has
received an interpretive letter, which has not been withdrawn, from the SEC staff to the effect that using the agent or
conduit to transmit information to the NRMSIRs and the SID will be treated for purposes of the Rule as if such
information were transmitted directly to the NRMSIRs and the SID.

                   SECTION 3.5. Transmission of Information and Notices. Unless otherwise required by law
and, in the City’s sole determination, subject to technical and economic feasibility, the City shall employ such
methods of information and notice transmission as shall be requested or recommended by the herein-designated
recipients of the City’s information and notices.

                  SECTION 3.6. Fiscal Year. (a) The City’s current fiscal year is July 1 - June 30, and the City
shall promptly notify (i) each NRMSIR, (ii) the MSRB and (iii) the SID of each change in its fiscal year.

                  (b) Annual Financial Information shall be provided at least annually notwithstanding any fiscal
year longer than 12 calendar months.

                                                   ARTICLE IV

                           Effective Date, Termination, Amendment and Enforcement

                  SECTION 4.1.      Effective Date; Termination. (a) This Certificate shall be effective upon the
issuance of the Bonds.

                 (b)      The City’s obligations under this Certificate shall terminate upon legal defeasance, prior
redemption or payment in full of all of the Bonds.

                    This Certificate or any provision hereof, shall be null and void in the event that the City
(1) delivers an opinion of Counsel, addressed to the City, to the effect that those portions of the Rule which require
this Certificate or such provision, as the case may be, do not or no longer apply to the Bonds, whether because such
portions of the Rule are invalid, have been repealed, or otherwise, as shall be specified in such opinion and
(2) delivers copies of such opinion to each NRMSIR and the SID.

                   SECTION 4.2. Amendment. (a) This Certificate may be amended, by written certificate of the
City Manager and the Director of Finance of the City, without the consent of the holders of the Bonds, if all of the
following conditions are satisfied: (1) such amendment is made in connection with a change in circumstances that
arises from a change in legal (including regulatory) requirements, a change in law (including rules or regulations) or
in interpretations thereof, or a change in the identity, nature or status of the City or the type of business conducted
thereby, (2) this Certificate as so amended would have complied with the requirements of the Rule as of the date of
this Certificate, after taking into account any amendments or interpretations of the Rule, as well as any change in
circumstances, (3) the City shall have received an opinion of Counsel addressed to the City, to the same effect as set
forth in clause (2) above and further to the effect that the amendment does not materially impair the interests of the
holders of the Bonds and (4) the City shall have delivered copies of such opinion and amendment to each NRMSIR
and the SID.


                                                         F-4
                  (b)      This Certificate may be amended, by written agreement of the parties, without the
consent of the holders of the Bonds, if all of the following conditions are satisfied: (1) an amendment to the Rule is
adopted, or a new or modified official interpretation of the Rule is issued, after the effective date of this Certificate
which is applicable to this Certificate, (2) the City shall have received an opinion of Counsel to the effect that
performance by the City under this Certificate as so amended will not result in a violation of the Rule and (3) the
City shall have delivered copies of such opinion and amendment to each NRMSIR and the SID.

                  (c)      To the extent any amendment to this Certificate results in a change in the types of
financial information or operating data provided pursuant to this Certificate, the first Annual Financial Information
provided thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the
change in the type of financial information or operating data being provided.

                   (d)      If an amendment is made pursuant to Section 4.2(a) hereof to the accounting principles to
be followed by the City in preparing financial statements, the Annual Financial Information for the fiscal year in
which the change is made shall present a comparison between the financial statements or information prepared on
the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such
comparison shall include a qualitative and, to the extent reasonably feasible, quantitative discussion of the
differences in the accounting principles and the impact of the change in the accounting principles on the presentation
of the financial information.

                   SECTION 4.3. Benefit; Third-Party Beneficiaries; Enforcement. (a) The provisions of this
Certificate shall constitute a contract with and inure solely to the benefit of the holders from time to time of the
Bonds, except that beneficial owners of Bonds shall be third-party beneficiaries of this Certificate. The provisions
of this Certificate shall create no rights in any person or entity except as provided in this subsection (a) or
subsection (b) of this Section 4.3.

                  (b)      The obligations of the City to comply with the provisions of this Certificate shall be
enforceable by the holders of the Bonds, including beneficial owners thereof. The rights of the holders of Bonds to
enforce the provisions of this Certificate shall be limited solely to a right, by action in mandamus or for specific
performance, to compel performance of the City’s obligations under this Certificate and the Resolution. In
consideration of the third-party beneficiary status of beneficial owners of Bonds pursuant to subsection (a) of this
Section 4.3, beneficial owners shall be deemed to be holders of Bonds for purposes of this subsection (b).

                   (c)      Any failure by the City to perform in accordance with this Certificate shall not constitute
a default under the Resolution and any rights and remedies provided by the Resolution upon the occurrence of a
default shall not apply to any such failure.

                   (d)     This Certificate shall be construed and interpreted in accordance with the laws of the
State, and any suits and actions arising out of this Certificate shall be instituted in a court of competent jurisdiction
in the State; provided, however, that to the extent this Certificate addresses matters of federal securities laws,
including the Rule, this Certificate shall be construed in accordance with such federal securities laws and official
interpretations thereof.

             IN WITNESS WHEREOF, the undersigned have executed this Certificate as of the date first above
written.

                                                             CITY OF ROANOKE, VIRGINIA


                                                             By:
                                                                   Title: City Manager


                                                             By:
                                                                   Title: Director of Finance


                                                          F-5
                                                                                               EXHIBIT A
                                                                        to Continuing Disclosure Certificate

      Filing information relating to the Nationally Recognized Municipal Securities Information Repositories
(“NRMSIRs”) approved by the Securities and Exchange Commission (subject to change):

Bloomberg Municipal Repository                         FT Interactive Data
100 Business Park Drive                                Attention: NRMSIR
Skillman, New Jersey 08558                             100 William Street
Telephone: (609) 279-3225                              New York, New York 10038
Facsimile: (609) 279-5962                              Telephone: (212) 771-6999
E-mail: munis@bloomberg.com                            Facsimile:   (212) 771-7390
                                                                    (Secondary Market Information)
                                                                    (212) 771-7391
                                                                    (Primary Market Information)
                                                       E-mail: nrmsir@ftid.com

DPC Data Inc.                                          Standard & Poor’s Securities Evaluations, Inc.
One Executive Drive                                    55 Water Street, 45th floor
Fort Lee, New Jersey 07024                             New York, New York 10041
Telephone: (201) 346-0701                              Telephone: (212) 438-4595
Facsimile: (201) 947-0107                              Facsimile:    (212) 438-3975
E-mail: nrmsir@dpcdata.com                             E-mail: nrmsir_repository@sandp.com

       An updated list of NRMSIRs may be found at the Securities and Exchange Commission website
(www.sec.gov).




                                                    F-6

				
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