The Haines Borough Planning Commission is seeking legal advice after a Mud Bay landowner said he’d seek compensation from the borough if commercial logging was restricted in the Mud Bay planning district.

Roger Schnabel owns 157 acres in the district. In a letter dated May 23, his attorney put the borough on notice after planning commission members began discussing potential prohibitions on extractive activities last month.

The question came after a person sought a permit to selectively log and sell timber in the area.

Borough planner Holly Smith said she couldn’t find language in Mud Bay zoning regulations that addresses resource extraction, defined in code, in part, as the clearing, mining or grading of land for commercial purposes.

Several Mud Bay residents disagreed, telling the commission code exists that addresses commercial sale of timber.

“I kind of think this whole thing was brought up mistakenly, because, based on (code)… under conditional uses, commercial enterprise is listed,” Katey Palmer said. “So it’s already described and I assume when you’re talking about extractive industries, they would be commercial enterprises.”

The Mud Bay zoning district allows cottage industry as a business that is secondary to residential use and is conducted by family residing on the property and up to three employees.

The code also allows “commercial enterprise” as a conditional use, any “commercial, manufacturing, sale or service that occurs on a person’s private property,” the code says. “A commercial enterprise shall be conducted only by a member or members of a family residing in a residence on the property and with up to six additional employees at any one time.”

Mud Bay resident and timber mill owner Sylvia Heinz said she was concerned her family’s business and its customers would have to apply for a conditional use permit for every job.

“When I went through our records for the last 18 months, since January 2016, 70 percent of our income has been off of Mud Bay resources,” Heinz said. “None of this actually came from our own property. This was all from buying trees from other Mud Bay residents, from property owners, and turning it into value-added products.”

Heinz’s operation falls under the code’s definition of “cottage industry,” said commission chair Rob Goldberg.

“I understand what you’re doing,” Goldberg said. “I recognize the value of the local wood and I recognize that people are using it and making things out of it. One of the things we wanted in the Mud Bay code when we wrote it 25 years ago is that part about self-sufficiency and cottage industry.”

Schnabel’s attorney Daniel Bruce wrote to the planning commission that timber harvesting is already subject to regulations and ordinances and that adding a conditional use process would “merely subject the property owner to a subject analysis intended to prevent the development.”

“Preventing the removal would amount to an unconstitutional taking, entitling our clients to an award of damages against the Borough,” Bruce said.

Schnabel bought the property 14 years ago with the intent to sell small amounts of timber and use the proceeds to develop the land, Bruce said.

Other large landowners in the area, the University of Alaska and the Alaska Mental Health Trust, also objected to any change that would limit commercial timber harvests.

Goldberg wanted to know from the borough attorney whether Mud Bay code language regarding commercial enterprise prohibits resource extraction.

“There’s a lot riding on this,” Goldberg said in reference to Schnabel’s attorney’s letter. “I don’t want to put this in martial terms, but it’s kind of like a shot across the bow. If you do this, watch out because we’re going to come after you…”

The borough expects a response from its attorney this week.