$10,315,000 County of Stafford, Virginia General Obligation Public Improvement Bonds, Series 2015

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1 NEW ISSUE BOOK-ENTRY ONLY Ratings: Fitch... AA+ Moody's..... Aa1 Standard & Poor's..... AAA (See "Ratings" herein). In the opinion of McGuireWoods LLP, Richmond, Virginia, Bond Counsel, under existing law and subject to conditions described in the section herein "Tax Matters," interest on the Bonds (a) will be excludable from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended, and (b) will not be a specific item of tax preference for purposes of the federal alternative minimum income tax imposed on individuals and corporations. Interest on the Bonds is included in adjusted current earnings for purposes of computing a corporation's federal alternative minimum tax. Interest on the Bonds will be exempt from income taxation by the Commonwealth of Virginia. See "Tax Matters" herein regarding certain other tax considerations. $10,315,000 County of Stafford, Virginia General Obligation Public Improvement Bonds, Series 2015 Dated: Date of Delivery Interest Payable: August 1 and February 1 Due: August 1, as shown below First Interest Payment: February 1, 2016 The General Obligation Public Improvement Bonds, Series 2015 (the "Bonds"), will constitute general obligations of the County of Stafford, Virginia (the "County"), for the payment of which the full faith and credit and unlimited taxing power of the County will be irrevocably pledged. See "SECTION TWO THE BONDS Security for the Bonds." The Bonds are issued for the purpose of financing certain transportation improvements and parks and recreation facilities for the County. See "SECTION TWO THE BONDS Authorization and Purpose of the Bonds" herein. The Bonds will be issued as fully registered bonds and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), which will act as securities depository of the Bonds. So long as Cede & Co. is registered owner of the Bonds, as the nominee for DTC, (a) references herein to the Bondholder or registered owner shall mean Cede & Co. and (b) principal and interest shall be payable by U.S. Bank National Association, as registrar and paying agent, to Cede & Co., as nominee for DTC, which will, in turn, remit such principal and interest to the DTC participants for subsequent disbursements to the beneficial owners of the Bonds. Individual purchases of beneficial ownership interest in the Bonds will be made in book-entry form only, in denominations of $5,000 or whole multiples thereof. Bond certificates will be immobilized at DTC and not available for delivery to the public, as described in "SECTION TWO THE BONDS Book-Entry-Only System." The Bonds will bear interest from their date of delivery, payable semiannually on August 1 and February 1, commencing on February 1, The Bonds maturing on or after August 1, 2026 are subject to redemption prior to their stated maturities at the option of the County as described in "SECTION TWO THE BONDS Redemption of Bonds" herein. MATURITY SCHEDULE CUSIP Base: August 1 Amount Interest Rate Initial Offering Price CUSIP Suffix ** August 1 Amount Interest Rate Initial Offering Price CUSIP Suffix ** 2016 $520, % KQ $515, % * LA , KR , * LB , KS , * LC , KT , LD , KU , LE , KV , LF , KW , LG , KX , LH , KY , LJ , KZ , LK7 * Priced to the August 1, 2025 optional redemption date. ** See disclaimer in "Section One" under CUSIP Numbers. The Bonds are offered for delivery, when, as and if issued, subject to the approval of validity by McGuireWoods LLP, Richmond, Virginia, Bond Counsel, as described herein. Certain legal matters will be passed upon for the County by the County Attorney. It is expected that the Bonds will be available for delivery through DTC, on or about August 11, This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. This Official Statement is dated July 28, 2015

2 COUNTY OF STAFFORD, VIRGINIA BOARD OF SUPERVISORS Gary F. Snellings, Chairman Laura A. Sellers, Vice Chairman Meg Bohmke Jack R. Cavalier Paul V. Milde, III Cord A. Sterling Robert Thomas, Jr. COUNTY OFFICIALS Anthony J. Romanello, County Administrator Maria J. Perrotte, Chief Financial Officer Charles L. Shumate, County Attorney Laura M. Rudy, County Treasurer Scott A. Mayausky, Commissioner of the Revenue W. Bruce Benson, Ed.D., Superintendent of Schools AUDITOR McGladrey, LLP New Bern, NC BOND COUNSEL McGuireWoods LLP Richmond, Virginia FINANCIAL ADVISOR Public Financial Management, Inc. Arlington, Virginia FOR ADDITIONAL INFORMATION Maria J. Perrotte, Chief Financial Officer (540) Kevin Rotty, Public Financial Management (703) Bonnie M. France, McGuireWoods LLP (804) i-

3 No dealer, broker, salesman or other person has been authorized to give any information or to make any representations other than as contained in this Official Statement in connection with the offering of the Bonds and, if given or made, such other information or representations must not be relied upon. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be a sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. This Official Statement is not to be construed as a contract or agreement between the County and the purchasers or owners of any of the Bonds. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the County since the date hereof. In connection with this offering the Underwriter may engage in transactions that stabilize, maintain or otherwise affect the price of the Bonds, including transactions to (a) overallot in arranging the sales of the Bonds and (b) to make purchases and sales of Bonds, for long or short account, on a when-issued basis or otherwise, at such prices, in such amounts and in such manner as the Underwriter may determine. Such transactions, if commenced, may be discontinued at any time. -ii-

4 TABLE OF CONTENTS Page SECTION ONE: INTRODUCTION... 1 The Issuer... 1 The Bonds... 1 Redemption... 1 Delivery... 1 Ratings... 2 CUSIP Numbers... 2 Additional Information... 2 SECTION TWO: THE BONDS... 3 Authorization and Purpose of the Bonds... 3 Description of the Bonds... 3 Redemption of Bonds... 4 Book-Entry-Only System... 4 Security for the Bonds... 6 Bondholders' Remedies in the Event of Default... 6 Approval of Legal Proceedings... 7 Tax Matters... 8 SECTION THREE: THE COUNTY OF STAFFORD, VIRGINIA General Description Government Principal Executive Officers Certain Administrative Staff Members Governmental Services Public Schools Courts and Corrections Public Safety Planning and Zoning Public Works Economic Development Social Services Parks and Recreation and Community Facilities Regional Landfill Regional and Community Support Utility System SECTION FOUR: FINANCIAL INFORMATION Annual Financial Report Description of Funds Budgetary Procedures Investments General Fund Revenues, Expenditures and Transfers Revenues Principal Tax Revenues by Source Expenditures and Transfers Five Year Governmental Funds Summary Operating Budget Information Tax Base Data Principal Taxpayers iii

5 Local Sales Tax Garrisonville Service District Published Financial Information SECTION FIVE: COUNTY INDEBTEDNESS AND CAPITAL IMPROVEMENT PROGRAM Issuance and Authorization of Bonded Indebtedness Tax and Revenue Anticipation Note Borrowing Long-Term Debt Annual Debt Service Utility System Bonds Overlapping Debt Leases and Contingent Liabilities Pension Plans Other Post-Employment Benefits Capital Improvement Program SECTION SIX: ECONOMIC AND DEMOGRAPHIC FACTORS Population Economic Development Redevelopment Master Plan Commerce, Industry and Employment Major Employers Personal Income Transportation Taxable Retail Sales Construction Activity SECTION SEVEN: MISCELLANEOUS Litigation Financial Advisor Bond Counsel Sale at Competitive Bidding Certificates of County Officials Continuing Disclosure Summaries and Descriptions Authorization Appendix A Audited Financial Statements for Fiscal Year Ended June 30, A-1 Appendix B Form of Continuing Disclosure Agreement... B-1 Appendix C Form of Opinion of Bond Counsel... C-1 -iv-

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7 OFFICIAL STATEMENT $10,315,000 County of Stafford, Virginia General Obligation Public Improvement Bonds, Series 2015 SECTION ONE: INTRODUCTION The purpose of this Official Statement is to furnish information in connection with the sale by the County of Stafford, Virginia (the "County"), of $10,315,000 General Obligation Public Improvement Bonds, Series 2015 (the "Bonds"). The Bonds will be general obligations of the County, for the payment of which the full faith and credit of the County is irrevocably pledged. Financial and other information contained in this Official Statement has been prepared by the County from its records (except where other sources are noted). This information speaks as of its date and is not intended to indicate future or continuing trends in the financial or economic position of the County. The Issuer The County is located in northeastern Virginia, approximately 40 miles south of Washington, D.C. and approximately 55 miles north of Richmond, Virginia. The County encompasses a land area of approximately 277 square miles. The County's estimated population as of July 1, 2014 is 138,423. The Bonds The Bonds consist of $10,315,000 General Obligation Public Improvement Bonds, Series 2015, dated their date of delivery, with principal payments due annually on August 1 from 2016 through The Bonds will be issued in book-entry-only form in authorized denominations of $5,000 and whole multiples thereof and will be held by The Depository Trust Company, New York, New York ("DTC"), or by its nominee as securities depository with respect to the Bonds. Interest on the Bonds will be payable on August 1 and February 1, commencing on February 1, 2016, until the earlier of maturity or redemption. As long as the Bonds are held by DTC or its nominee, interest will be paid to Cede & Co., as nominee of DTC, on each interest payment date. Redemption The Bonds maturing on or before August 1, 2025 are not subject to redemption before maturity. The Bonds maturing on or after August 1, 2026, are subject to redemption prior to maturity at the option of the County on or after August 1, 2025 as set forth in "SECTION TWO THE BONDS Redemption of Bonds" herein. Delivery The Bonds are offered for delivery, when and if issued, subject to the approval of validity by McGuireWoods LLP, Richmond, Virginia, Bond Counsel, and to certain other conditions referred to herein. Certain legal matters will be passed upon for the County by the County Attorney, Charles L. Shumate, Esquire. It is expected that the Bonds will be available for delivery, at the expense of the County, in New York, New York, through the facilities of DTC, on or about August 11, 2015.

8 Ratings The ratings shown on the front cover of this Official Statement have been received from Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007, Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., 55 Water Street, New York, New York and Fitch Ratings, One State Street Plaza, New York, New York An explanation of the significance of such ratings may be obtained from the rating agency furnishing the same. The County furnished the information contained in this Official Statement and certain publicly available materials and information about the County to these rating agencies. Such ratings may be changed at any time, and no assurances can be given that they will not be revised downward or withdrawn entirely by any or all such rating agencies if, in the opinion of any or all, circumstances so warrant. Such circumstances may include, without limitation, changes in or unavailability of information relating to the County. Any such downward revision or withdrawal of either of such ratings may have an adverse effect on the market price of the Bonds. CUSIP Numbers CUSIP is a registered trademark of the American Bankers Association ("ABA"), used by Standard & Poor's in its operation of the CUSIP Service Bureau for the ABA. The CUSIP (Committee on Uniform Securities Identification Procedures) numbers shown on the cover of this Official Statement have been assigned by an organization not affiliated with the County, and the County is not responsible for the selection or use of the CUSIP numbers. The CUSIP numbers are included solely as a convenience to prospective purchasers and holders of the Bonds and no representation is made as to the correctness of such CUSIP numbers. CUSIP numbers assigned to the Bonds may be changed while they are outstanding based on a number of factors including, but not limited to, the refunding or defeasance of the Bonds or the use of secondary market financial products. There is no duty or obligation to, update this Official Statement to reflect any change of correction in the CUSIP numbers set forth in this Official Statement. Additional Information Any question concerning the content of this Official Statement should be directed to Maria J. Perrotte, Chief Financial Officer, 1300 Courthouse Road, Stafford, Virginia 22554, (540) ; Kevin Rotty, Managing Director, Public Financial Management, Inc., 4350 North Fairfax Drive, Suite 580, Arlington, Virginia 22203, (703) or Bonnie M. France, McGuireWoods LLP, Gateway Plaza, 800 East Canal Street, Richmond, Virginia 23219, (804) [Remainder of Page Intentionally Left Blank] -2-

9 Authorization and Purpose of the Bonds SECTION TWO: THE BONDS Issuance of the Bonds is authorized by a resolution adopted by the Board of Supervisors on June 2, 2015 (the "Resolution") and by special elections described below, pursuant to and in conformity with Article VII, Section 10 of the Constitution of the Commonwealth of Virginia, and pursuant to the provisions of the Public Finance Act of 1991 (Chapter 26, Title 15.2 of the Code of Virginia of 1950, as amended). On November 4, 2008 the County held a special election (the "Transportation Bond Referendum") on the question of issuing general obligation bonds of the County in the maximum aggregate principal amount of $70,000,000 to finance transportation improvement projects, at which 30,429 voters of the County voting in the Transportation Bond Referendum approved the issuance of such bonds and 23,055 voters voted against such issuance. The County has previously issued bonds approved at the Transportation Bond Referendum in the principal amount of $7,802,655. On November 3, 2009 the County held a special election (the "Parks Bond Referendum") on the question of issuing general obligation bonds of the County in the maximum aggregate principal amount of $29,000,000 to finance parks and recreation projects at which 14,698 voters of the County voting in the Parks Bond Referendum approved the issuance of such bonds and 12,574 voters voted against such issuance. The County has previously issued bonds approved at the Parks Bond Referendum in the principal amount of $16,272,345. The following table sets forth the anticipated application of the proceeds of the Bonds, for the purposes described above: Sources of Funds Face Amount of Bonds $10,315, Net Premium 1,007, Total Sources $11,322, Uses of Funds Transportation Project Costs $4,700, Parks Project Costs 6,400, Costs of Issuance (including underwriter's compensation) 222, Total Uses $11,322, Description of the Bonds The Bonds will be issued in fully registered form in the denominations of $5,000 or integral multiples thereof and will be held by The Depository Trust Company ("DTC"), or its nominee, as securities depository with respect to the Bonds, as described in "SECTION TWO THE BONDS Book-Entry-Only System" herein. Purchases of beneficial ownership interests in the Bonds will be made only in book-entry form and individual purchasers will not receive physical delivery of bond certificates. The Bonds will be dated their date of delivery, will bear interest at the rates per annum set forth on the cover page hereof, payable on February 1, 2016, and semi-annually thereafter on August 1 and February 1 of each year (an "Interest Payment Date"), and will mature on August 1 in the years and in the principal amounts set forth on the cover page hereof. The County has appointed U.S. Bank National Association, as the Bond registrar and paying agent (the "Registrar"). The County Administrator may appoint successor registrars and/or paying agents upon -3-

10 giving written notice to the owners of the Bonds specifying the name and location of the principal office of any such successor bond registrar or paying agent. All interest payments will be made to the registered owner as such owner or owners appear on the registration books kept by the Registrar on the fifteenth day of the month preceding each Interest Payment Date (the "Record Date"). Redemption of Bonds Optional Redemption The Bonds maturing on or before August 1, 2025 are not subject to redemption prior to maturity. The Bonds maturing on or after August 1, 2026 are subject to redemption prior to maturity at the option of the County on or after August 1, 2025 in whole or in part (in any multiple of $5,000), at any time or from time to time, without penalty or premium upon payment of the principal amount of Bonds to be redeemed plus accrued interest to the redemption date. Selection of Bonds for Redemption; Notice If less than all of the Bonds are called for redemption, the Bonds to be redeemed shall be selected by the County Administrator. If less than all of the Bonds of any maturity are called for redemption, the Bonds of such maturity to be redeemed shall be selected by DTC or any successor securities depository or, if the bookentry system is discontinued, by the Registrar, by lot. In either case, each $5,000 of principal amount shall be counted as one Bond for such purpose. The County Administrator shall cause notice of the call for redemption identifying the Bonds, or portions thereof, to be redeemed to be sent by first class mail, facsimile transmission, electronic mail or overnight delivery service to the registered owners thereof not less than 30 nor more than 60 days prior to the redemption date. Any notice of a call for redemption of the Bonds or any portions thereof may state that the redemption is conditioned upon there being available an amount of money sufficient to pay the redemption price of and interest accrued and unpaid on the Bonds called for redemption to the date fixed for redemption or such other condition as may be set forth in such notice. Any such conditional notice given may be rescinded at any time before the payment of the redemption price if the condition specified in the conditional notice is not satisfied. Book-Entry-Only System The description which follows of the procedures and recordkeeping with respect to beneficial ownership interests in the Bonds, payments of principal of and interest on the Bonds to DTC, its nominee, Participants, as defined below, or Beneficial Owners, confirmation and transfer of beneficial ownership interests in the Bonds and other bond-related transactions by and between DTC, Participants and Beneficial Owners is based solely on information furnished by DTC. The Depository Trust Company ("DTC"), New York, New York, 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 certificate will be issued for each maturity of the Bonds and will be deposited with DTC. DTC, the world's largest securities 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 DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non U.S. equity issues, 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 posttrade 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 -4-

11 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 and Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. 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 rating: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at 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 purchase. But Beneficial Owners are, however, expected to receive written confirmation 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 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 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 Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts 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 Securities 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 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the County 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). Principal and interest payments on the Bonds will be made to DTC 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 detailed information from the County on the 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 in the case with securities 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 or the County, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the County, disbursement of such -5-

12 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 securities depository with respect to the Bonds at any time by giving reasonable notice to the County. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be prepared, executed and delivered. The foregoing information in this section concerning DTC and DTC's book-entry only system has been obtained from sources that the County believes to be reliable, but the County takes no responsibility for the accuracy thereof. The County may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, either a successor securities depository will be selected by the County or replacement Bond certificates will be prepared, executed and delivered. The County has no responsibility or obligation to Direct or Indirect Participants or Beneficial Owners with respect to (a) the accuracy of any records maintained by DTC or any Direct or Indirect Participant, (b) the payment by DTC or any Direct or Indirect Participant of any amount due to any Beneficial Owner in respect of the principal of and interest on the Bonds, (c) the delivery or timeliness of delivery by any Direct or Indirect Participant of any notice to any Beneficial Owner which is required or permitted under the terms of the Bonds to be given to the Registered Owner of the Bonds, (d) the selection of the Beneficial Owners to receipt payments in the event of any partial redemption of the Bonds, or (e) any other action taken by DTC, or its nominee, Cede & Co., as Registered Owner of the Bonds. So long as Cede & Co. is the Registered Owner of the Bonds, as nominee of DTC, references in this Official Statement to the Registered Owners of the Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners and Cede & Co. will be treated as the only Bondholder of the Bonds for all purposes under the Bonds. The County may enter into amendments to the agreement with DTC or successor agreements with a successor securities depository, relating to the book-entry system to be maintained with respect to the Bonds without the consent of Beneficial Owners or Bondholders. Security for the Bonds The Bonds constitute general obligations of the County, and the full faith and credit of the County are irrevocably pledged to the payment of principal of and interest on the Bonds. The proceedings authorizing the issuance of the Bonds provide that the Board of Supervisors shall, in each year while any of the Bonds shall be outstanding, levy and collect on all property in the County subject to local taxation an annual ad valorem tax 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, unless other funds are legally available and appropriated for timely payment of the Bonds. Bondholders' Remedies in the Event of Default Section of the Code of Virginia of 1950, as amended, provides that upon affidavit filed by or on behalf of any owner, or by any paying agent therefor, of a general obligation bond in default as to payment of principal or interest, the Governor shall forthwith conduct a summary investigation and, if such default is established to the Governor's satisfaction, the Governor shall immediately order the State Comptroller to withhold all funds appropriated and payable by the Commonwealth of Virginia (the "Commonwealth") to the political subdivision so in default and apply the amount so withheld to payment of the defaulted principal and interest. Section also provides for notice to registered owners of the Bonds of the default and the availability of withheld funds. The State Comptroller advises that to date no order to withhold funds pursuant to Section or its predecessor provisions Section and Section -6-

13 has ever been issued. Although neither Section nor its predecessors Section or Section has been approved by a Virginia court, the Attorney General of Virginia has ruled that appropriated funds may be withheld by the Commonwealth pursuant to that section. The County received a total of $23,260,075 in General Fund revenues and $135,281,331 in School Operating Fund revenues from the Commonwealth during the fiscal year ended June 30, Neither the Bonds nor the proceedings with respect thereto specifically provide any remedies to Bondholders if the County defaults in the payment of principal of or interest thereon, nor do they contain any provision for the appointment of a trustee to enforce the interests of the Bondholders upon the occurrence of such default. Upon any default in the payment of principal or interest, a Bondholder could, among other things, seek from an appropriate court a writ of mandamus requiring the Board of Supervisors to observe the covenants contained in the Bonds. The mandamus remedy, however, may be impracticable and difficult to enforce. Furthermore, the right to enforce payment of 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. Chapter 9 of the United States Bankruptcy Code (the "Bankruptcy Code") permits a municipality such as the County, if insolvent or otherwise unable to pay its debts as they become due, to file a voluntary petition for the adjustment of debts provided that such municipality is "generally authorized to be a debtor under Chapter 9 by State law, or by a governmental officer or organization empowered by State law to authorize such entity to be a debtor..." (Bankruptcy Code, 109(c)(2)). Current Virginia statutes do not expressly authorize the County or municipalities generally to file for bankruptcy under Chapter 9. Chapter 9 does not authorize the filing of involuntary petitions against municipalities such as the County. Bankruptcy proceedings by the County could have adverse effects on Bondholders including (a) delay in the enforcement of their remedies, (b) subordination of their claims to claims of those supplying goods and services to the County 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 claims or the "indubitable equivalent" thereof, although such plan may not provide for payment of the Bonds in full. The effect of these and other provisions of the Bankruptcy Code cannot be predicted and may be significantly affected by judicial interpretations. The County has never defaulted in the payment of either principal or interest on any debt obligation. Approval of Legal Proceedings Certain legal matters relating to the authorization and validity of the Bonds will be subject to the approving opinion of McGuireWoods LLP, Richmond, Virginia, Bond Counsel, which will be furnished at the expense of the County upon delivery of the Bonds (the "Bond Opinion"). The Bond Opinion will be limited to matters relating to the authorization and validity of the Bonds and to the tax-exempt status of interest thereon as described in the following section. Bond Counsel has not been engaged to investigate the financial resources of the County or its ability to provide for payment of the Bonds, and the Bond Opinion will make no statement as to such matters or as to the accuracy or completeness of this Official Statement or any other information that may have been relied on by anyone in making the decision to purchase the Bonds. -7-

14 Tax Matters Opinion of Bond Counsel - Federal Income Tax Status of Interest Bond Counsel's opinion will state that, under current law, interest on the Bonds (including any accrued "original issue discount" properly allocable to the owners of such Bonds) is excludable from gross income for purposes of federal income taxation under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code") and that interest on the Bonds is not a specific item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. However, for purposes of the alternative minimum tax imposed on corporations (as defined for federal income tax purposes under Section 56 of the Code), interest on the Bonds must be included in computing adjusted current earnings. See "Form of Opinion of Bond Counsel" in Appendix C hereto. Bond Counsel will express no opinion regarding other federal tax consequences arising with respect to the Bonds. Reliance and Assumptions; Effect of Certain Changes In delivering its opinion regarding the Bonds, Bond Counsel is relying upon certifications of representatives of the County and other persons as to facts material to the opinion, which Bond Counsel has not independently verified. In addition, Bond Counsel is assuming continuing compliance with the Covenants (as hereinafter defined) by the County. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied after the issuance of the Bonds in order for interest on the Bonds to be and remain excludable from gross income for purposes of federal income taxation. These requirements include, by way of example and not limitation, restrictions on the use, expenditure and investment of the proceeds of the Bonds and the use of the property financed or refinanced by the Bonds, limitations on the source of the payment of and the security for the Bonds, the obligation to rebate certain excess earnings on the gross proceeds of the Bonds to the United States Treasury. The County's Non-Arbitrage Certificate and Tax Covenants to be executed and delivered by the County with respect to the Bonds contains covenants (the "Covenants") under which the County has agreed to comply with such requirements. Failure by the County to comply with the Covenants could cause interest on the Bonds to become includable in gross income for federal income tax purposes retroactively to their date of issue. In the event of noncompliance with the Covenants, the available enforcement remedies may be limited by applicable provisions of law and, therefore, may not be adequate to prevent interest on the Bonds from becoming includable in gross income for Federal income tax purposes. Bond Counsel has no responsibility to monitor compliance with the Covenants after the date of issue of the Bonds. Certain requirements and procedures contained, incorporated or referred to in the Non-Arbitrage Certificate, including the Covenants, may be changed and certain actions may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion concerning any effect on the excludability of interest on the Bonds from gross income for federal income tax purposes of any such subsequent change or action that may be made, taken or omitted upon the advice or approval of counsel other than Bond Counsel. -8-

15 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 thereof. Prospective purchasers of the Bonds, particularly those who may be subject to special rules, are advised to consult their own tax advisors regarding the federal tax consequences of owning or disposing of the Bonds. Prospective purchasers of the Bonds should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to certain taxpayers including, without limitation, financial institutions, certain insurance companies, certain corporations (including S corporations and foreign corporations), certain foreign corporations subject to the "branch profits tax," individual recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations and taxpayers attempting to qualify for the earned income tax credit. In addition, prospective purchasers should be aware that the interest paid on, and the proceeds of the sale of, tax-exempt obligations, including the Bonds, are in many cases required to be reported to the IRS in a manner similar to interest paid on taxable obligations. Additionally, backup withholding may apply to any such payments made after March 31, 2007 to any Bond owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Bond owner who is notified by the IRS of a failure to report all interest and dividends required to be shown on federal income tax returns. The reporting and withholding requirements do not in and of themselves affect the excludability of such interest from gross income for federal tax purposes or any other federal tax consequence of purchasing, holding or selling tax-exempt obligations. -9-

16 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. 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. Prospective purchasers 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. Original Issue Discount The "original issue discount" ("OID") on any bond is the excess of such bond's stated redemption price at maturity (excluding certain "qualified stated interest" that is unconditionally payable at least annually at prescribed rates) over the issue price of such bond. The "issue price" of a bond is the initial offering price to the public at which price a substantial amount of such bonds of the same maturity was sold. The "public" does not include bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers. The issue price for each maturity of the Bonds is expected to be the initial public offering price set forth on the cover page of this Official Statement (or, in the case of Bonds sold on a yield basis, the initial offering price derived from such yield), but is subject to change based on actual sales. OID on the Bonds with OID (the "OID Bonds") represents interest that is excludable from gross income for purposes of federal and Virginia income taxation. However, the portion of the OID that is deemed to have accrued to the owner of an OID Bond in each year may be included in determining the alternative minimum tax and the distribution requirements of certain investment companies and may result in some of the collateral federal income tax consequences mentioned in the preceding subsection. Therefore, owners of OID Bonds should be aware that the accrual of OID in each year may result in alternative minimum tax liability, additional distribution requirements or other collateral federal and Virginia income tax consequences although the owner may not have received cash in such year. Interest in the form of OID is treated under Section 1288 of the Code as accruing under a constant yield method that takes into account compounding on a semiannual or more frequent basis. If an OID Bond is sold or otherwise disposed of between semiannual compounding dates, then the OID which would have accrued for that semiannual compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period. In the case of an original owner of an OID Bond, the amount of OID that is treated as having accrued on such OID Bond is added to the owner's cost basis in determining, for federal income tax purposes, gain or loss upon its disposition (including its sale, redemption or payment at maturity). The amounts received upon such disposition that are attributable to accrued OID will be excluded from the gross income of the recipients for federal income tax purposes. The accrual of OID and its effect on the redemption, sale or other disposition of OID Bonds that are not purchased in the initial offering at the initial offering price may be determined according to rules that differ from those described above. -10-

17 Prospective purchasers of OID Bonds should consult their own tax advisors with respect to the precise determination for federal income tax purposes of interest accrued upon sale or redemption of such OID Bonds and with respect to state and local tax consequences of owning OID Bonds. Possible Legislative or Regulatory Action Legislation and regulations affecting tax-exempt bonds are continually being considered by the United States Congress, the U.S. Department of the Treasury ("Treasury") and the IRS. In addition, the IRS has established an expanded audit and enforcement program for tax-exempt bonds. There can be no assurance that legislation enacted or proposed after the date of issue of the Bonds or an audit initiated or other enforcement or regulatory action taken by the Treasury or the IRS involving either the Bonds or other tax-exempt bonds will not have an adverse effect on the tax status or the market price of the Bonds or on the economic value of the tax-exempt status of the interest thereon. Opinion of Bond Counsel - Virginia Income Tax Consequences Bond Counsel's opinion also will state that, under existing law, interest on the Bonds is excludable from gross income for purposes of income taxation by the Commonwealth. Bond Counsel will express no opinion regarding (i) other Virginia tax consequences arising with respect to the Bonds or (ii) any consequences arising with respect to the Bonds under the tax laws of any state or local jurisdiction other than Virginia. Prospective purchasers of the Bonds should consult their own tax advisors regarding the tax status of interest on the Bonds in a particular state or local jurisdiction other than Virginia. [Remainder of Page Intentionally Left Blank] -11-

18 General Description SECTION THREE: THE COUNTY OF STAFFORD, VIRGINIA The County is located in northeastern Virginia approximately 40 miles south of the District of Columbia and 55 miles north of Richmond, Virginia. The County encompasses a land area of approximately 277 square miles. The County is bounded on the east by the Potomac River and on the south by the Rappahannock River. Adjacent to the County are the Counties of Prince William, King George, Caroline, Spotsylvania, Culpeper and Fauquier as well as the City of Fredericksburg. Interstate Highway 95 runs north-south through the middle of the County, with four interchanges located within the County. Because of its proximity to Washington, D.C., the County is one of the faster growing political subdivisions of comparable size in the United States and one of the fastest growing counties in Virginia. The County's 2014 estimated population of 138,423 represents an increase of approximately 7.3% from the 2010 Census population of 128,961. Approximately 20% of the property located in the County is owned by the federal government, representing primarily the portion of the Quantico Marine Base which is located within the County. Government The County was formed as an independent county in 1664 and is organized under the traditional county form of government. The Board of Supervisors, which establishes policies for the administration of the County, is the governing body of the County. The residents of each of the County's seven election districts elect one member of the Board to serve a term of four years. The Chairman and Vice Chairman of the Board are selected annually by the members of the Board. The Board appoints a County Administrator to serve as the administrative manager of the County. The County Administrator serves at the pleasure of the Board, implements its policies, directs business and administrative procedures, and recommends officials to be appointed by the Board. The County Administrator is currently assisted by staff departments and offices including Planning and Zoning, Public Works, Utilities, Parks, Recreation and Community Facilities, Fire and Rescue, Economic Development and Redevelopment, Finance and Budget, Human Resources, Human Services, Social Services, and Information Technology. The operation of public schools in the County is vested in a seven-person School Board. The members of the School Board are elected by the residents of the County to serve four year terms. The local share of the cost of operating public schools in the County is met with an appropriation by the Board of Supervisors from the County's General Fund. Operations of the School Board, however, are independent of the Board of Supervisors and the County administration as prescribed by Virginia law. A Superintendent is appointed by the School Board to administer the operations of the County's public schools. In Virginia, cities and counties are not overlapping units of government. There are no incorporated municipalities within the boundaries of the County. Accordingly, the County is responsible for providing all local government services to its residents. -12-

19 Principal Executive Officers Official Name Term and Manner of Selection Board Chairman Gary F. Snellings 4 years (Elected) Board Vice Chairman Laura A. Sellers 4 years (Elected) Board Member Jack R. Cavalier 4 years (Elected) Board Member Paul V. Milde III 4 years (Elected) Board Member Meg Bohmke 4 years (Elected) Board Member Cord A. Sterling 4 years (Elected) Board Member Robert "Bob" Thomas, Jr. 4 years (Elected) Length of Service 9½ years Not Consecutive Expiration of Term December 31, ½ years December 31, ½ years Not Consecutive December 31, ½ years December 31, ½ years December 31, ½ years December 31, ½ years December 31, 2015 County Administrator Anthony J. Romanello Appointed by Board 7½ years Pleasure of Board County Attorney Charles L. Shumate Appointed by Board County Treasurer Laura M. Rudy 4 years (Elected) 4 years Pleasure of Board 7½ years December 31, 2015 Chief Financial Officer Maria J. Perrotte Appointed by County Administrator 8 years Pleasure of County Administrator Certain Administrative Staff Members Anthony J. Romanello, County Administrator, has made his career serving local governments in Virginia. He worked for the City of Richmond in various roles from including four years as Assistant to the City Manager. He was Town Manager of West Point from 2000 to From , he was Deputy County Administrator for Stafford County, Virginia. On January 1, 2008, he became Stafford's sixth County Administrator. Mr. Romanello has a Bachelor of Arts in History and American Government with a Minor in Religious Studies from the University of Virginia and a Master of Public Administration from Virginia Commonwealth University. He is a credentialed manager through the International City/County Management Association (ICMA). He is a graduate of the Harvard Kennedy School's Senior Executives in State & Local Government program and the University of Virginia's Senior Executive Institute. He serves on the adjunct faculty in the Virginia Tech and George Mason Master of Public Administration programs. Mr. Romanello is an Eagle Scout. -13-

20 Timothy J. Baroody, Deputy County Administrator and Director of Economic Development and Legislative Affairs, became Director of Economic Development and Legislative Affairs in 2003, and Deputy County Administrator in January Previously, he was the deputy chief of staff and legislative director for Virginia Congresswoman Jo Ann Davis, and served Congressman Bud Shuster as a Legislative Aide. Mr. Baroody has a B.S. in Political Science with a minor in History from Frostburg State University, and a Master of Public Administration from Virginia Tech. Keith C. Dayton, Deputy County Administrator, and Director of Solid Waste, became Deputy County Administrator in January 2012 and Director of Solid Waste in May He began employment with Stafford County in 1989, and has held the positions of Assistant Director of Utilities, Director of Public Works and Acting Deputy County Administrator. He received his Bachelor of Science degree from Utah State University. Charles L. Shumate, County Attorney, was appointed in October Before being appointed as the Stafford County Attorney, Mr. Shumate was a private practitioner in Northern Virginia with extensive experience in land use and real estate development law, commercial/business transactions, local government law, and the trial of complex real estate, commercial, and construction-related matters. Through his private practice, Mr. Shumate was retained as Special Counsel and Deputy City Attorney for the City of Fairfax, handling virtually all types of governmental litigation and other facets of municipal representation. He was also involved in inter-governmental negotiations and transactions with neighboring jurisdictions. He has represented various boards and commissions of the City of Fairfax, including the City Council, Board of Zoning Appeals, Planning Commission, and Economic Development Authority. Mr. Shumate was the managing partner of Shumate, Kraftson & Sparrow, P.C., in Reston, Virginia, and the resident managing partner for Walsh, Colucci, Stackhouse, Emrich & Lubeley, P.C., in Loudoun County, Virginia. Mr. Shumate was trained as an infantry officer at the Virginia Military Institute and commissioned as a second lieutenant upon graduation. He served as a captain in the U.S. Army in the Office of the Staff Judge Advocate, Headquarters, 1st Logistical Command, and was awarded the Bronze Star Medal for his service in Vietnam. Mr. Shumate has a B.A. in History from VMI, and a Juris Doctor Degree from the Washington College of Law of the American University. Maria J. Perrotte, Chief Financial Officer, was appointed in June Ms. Perrotte has 26 years of experience in local government. She previously served as the Assistant Superintendent for Business and Finance in the King George County School System and served as Assistant Director of Chesterfield County's Budget Office. She has a Bachelor's Degree in Business and Chemistry from the University of Richmond and an M.B.A. from Virginia Commonwealth University. Ms. Perrotte is a graduate of GFOA's Advanced Government Finance Institute and the University of Virginia's Senior Executive Institute. Mickey A. Kwiatkowski, Controller, has served with Stafford County for over 23 years. Prior to her appointment to Controller, she served as Accounting Manager for 11 years. She earned a Associates Degree in Banking & Finance from Tidewater Community College and a Bachelor of Professional Studies from Mary Washington College. Nancy A. Collins, Budget Division Director, was appointed in September She has been with Stafford County government since 1991, working in the Finance and Utilities departments. Prior to this appointment, she served as Utilities Financial Manager for five years. She received a Bachelor of Liberal Studies in Business Administration from Mary Washington College and a M.B.A. from Virginia Polytechnic and State University. Ms. Collins is a graduate of the University of Virginia's Senior Executive Institute. -14-