The fear is that heavy rain could cause the water on Blackwater Creek to rise 17 feet in mere minutes.
This area is right near the University of Lynchburg.
Later Friday, officials from the city said the inspection showed "the structure is now stable and that there is no immediate fear of dam failure".
"Lynchburg received 1.35 inches of rain on Thursday and 2.00 inches so far this month", AccuWeather Meteorologist Brett Rathbun said. The dam "is being closely monitored ... for any signs of structural failure" as another inch or so of rain is expected Friday near Lynchburg, 50 miles east of Roanoke, according to the National Weather Service. Local fire and police used boats to rescue people.
Evacuated residents were told to expect a decision about whether they could return to their homes, or if it was too risky to do so, in the early afternoon.
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"We are developing a plan to stabilize the dam which may include opening the sluice gate at the dam to reduce the water levels", the city said in a statement, adding those downstream should not see significant flooding if that occurs. A flash flood watch was in effect until 11 a.m.
The dam was built in the early '30s and, like many dams in the usa, doesn't meet current safety standards.
That will relieve pressure on the damaged dam and aid in repairs.
Firemen waded through flood waters on Thursday in Lynchburg.
The area has been pounded for days with rain, and the NWS warned early Friday that there was the possibility of more showers and thunderstorms through Friday night, with up to 3 more inches of precipitation.
Because the sediment from the city's runoff is trapped above the dam, the lake has dramatically reduced in size.