Takatz Creek and Takatz Lake lie in a deep glacial trough on the east coast of Baranof Island, east-northeast of Sitka. In addition to investigations by the U.S. Geological Survey, the powersite has been examined for possible development by the U.S. Bureau of Reclamation. The Bureau proposes a double-curvature thin arch dam 200 feet downstream from the lake outlet that would raise Takatz Lake from 905 to 1,040 feet. A pressure tunnel 8 feet in diameter and 3,860 feet long would lead to a surface penstock that would start at the 650-foot level and extend about 1,000 feet to a powerhouse on Takatz Bay. A 60-foot-high auxiliary dam or dike is also required to prevent water from flowing through a saddle east of the right abutment. All the proposed structures and the reservoir site are underlain by competent quartz diorite which is part of a large complex pluton about 10 miles wide centered around Baranof Lake. Zones of closely spaced joints that strike through the main damsite, possibly through the auxiliary damsite, and through the saddle east of the right abutment are possible paths of leakage. Where the tunnel route passes beneath the saddle, it has only about 140 feet of cover, a large part of which is probably loose talus. Pressure tests in two shallow holes drilled by the Bureau of Reclamation at the damsite indicate that the quartz diorite is tight, but additional drilling is required at all three localities. Waves generated by rockslides or rockfalls into the reservoir appear to be the most significant hazard affecting the powersite. Construction materials include fluvioglacial material from the area above the head of the lake and from the tidal flat at the head of Takatz Bay, and talus from the deposits near the damsite.