COEUR d'ALENE - Put the lawsuit on pause.

An Athol log home construction company that sued Kootenai County earlier this year for shuttering its business is working toward a compromise.

Agreeing to set the lawsuit aside for now, Edgewood Log Structures has applied for a new permit to operate a production sawmill and woodworking business on its 82 acres.

The permit is crucial for the company's survival during the recession, according to the application for a conditional use permit.

"One year ago Edgewood Log Structures employed over 50 people and grossed $5 million a year," reads the document, submitted on Edgewood's behalf by E2 Planning and Design, LLC. "As of this writing, their employee count is down to 1, with a gross income of less than $1 million a year, the majority of that income coming from the sale of chips to pulp mills over the last half of 2009."

Kootenai County issued a stop-work order on some Edgewood parcels in January, due to pulp and wood chipping operations the county deemed outside the company's permit.

Those parcels were also where the company conducted its log home operations, owner Brian Schafer said in January.

Contending that all of the company's operations were permitted, Schafer filed legal action against the county and asked for $10,000 in damages.

But now there's a new course.

The county and company agreed the lawsuit would be put on hold while Schafer pursued a new permit covering all of Edgewood's operations, said Pat Braden, prosecuting attorney for Kootenai County.

"We both basically agreed it would be a better allocation of everybody's time and efforts to go through the permit process and see where that goes," Braden said.

A county examiner will hold a public hearing on the permit application at 6 p.m. Thursday, Aug. 19 in Meeting Room 1 of the Kootenai County Administration Building.

After the examiner makes a recommendation, the county commissioners will hold a hearing and make a final decision.

Schafer can bring up the suit again if his permit application is denied, Braden said.

The county has allowed Edgewood to operate only at a very limited extent since January, he added.

"Our code enforcement staff has been very much on top of that," he said.

Schafer did not have time to comment on Monday.

Under the new permit, Edgewood, which has been at its current location for 10 of its roughly 25 years, could operate log home manufacturing, siding production, lumber manufacturing, chipping and grinding.

Edgewood will need pulp and chipping business to get through the recession, according to the application.

"Log structure companies cannot depend upon log structure sales alone during this economic downturn," the document reads. "Without the ability to chip salvage logs from every truckload that arrives, Edgewood Log Structures will be forced out of business."

Schafer has also requested to establish a cogeneration operation to heat the company's buildings and operate their dry kilns, which will be more energy efficient.

The application assured the woodworking and sawmill operations would not exceed 70 decibels. Schafer has also agreed to improve Parks Road near the company's location at U.S. 95 and Parks Road.

"Approval of this conditional use permit allows for the continuation of a business that has provided a viable economic base through jobs and local products for over 25 years," the document reads.