On July 8, 1927, the Federal Power Commission granted a license to Lexington Water Power Company for construction of a dam and powerhouse at Dreher Shoals. Immediately, the company went to work on securing the land needed for construction of the lake and dam. The reservoir and its protective margins covered an area of about 65,000 acres (260 km2) and to secure this, it was necessary to purchase a total of approximately 100,000 acres (400 km2) of which approximately 75% was woodland.