ITEM TITLE:
Approval of Recommendation to City Council to Authorize a Gravel Lease for Knik Construction Co. on a 21.3 Acre Portion of Parcel E 1, Tract A, ASLS 79-116, According to Plat 2002-12 and Tract C-1, ASLS 79-116, According to Plat 2002-13.
SUBMITTED BY: Bruce Wall, Senior Planner
FISCAL NOTES:
Expenditure Required: N/A
Unencumbered Balance: N/A
Funding Source: N/A
RECOMMENDATION:
Approve recommendation to City Council for a gravel lease application for Knik Construction Co. on a 21.3-acre portion of Parcel E 1, Tract A, ASLS 79-116, according to Plat 2002-12 and Tract C-1, ASLS 79-116, according to Plat 2002-13, subject to the conditions contained in the summary statement.
SUMMARY STATEMENT:
Knik Construction Co. has submitted an application for a gravel lease on 35.7 acres located at 1001 Airport Road. For the past 23 years this property was part of a gravel lease to Harris Sand and Gravel. Harris Sand and Gravel has indicated that they do not wish to continue the gravel lease at this location and Knik Construction is in the process of purchasing the assets of Harris Sand and Gravel.
Parcel C-1 has recently been rezoned to Heavy Industrial.
A phase 1 environmental assessment was done on the property in 2022, and Harris Sand and Gravel recently had an additional environmental assessment completed. These assessments revealed some Recognized Environmental Conditions (RECs) on the property; specifically, soil staining associated with above-ground storage containers being used for petroleum products. These RECs are in the process of being remediated and we anticipate getting a remediation completion letter from Alaska Department of Environmental Conservation soon.
Lease Area Information
Property Owner: City of Valdez
Acreage: Tract C-1 - 14.40 acres, portion of Parcel E 1 - 21.30 acres. 35.70 total acres.
Access: Airport Road via adjacent State land.
Current Uses: Gravel extraction
Adjacent Uses: Gravel extraction, airport, campground, and landfill (construction and demolition).
Zoning District: Heavy Industrial
Adjacent Zoning Districts: Heavy Industrial, Public Lands, Light Industrial, and Airport
Comprehensive Plan Place Type: Industrial Hub
Application Process
The Community Development Department received a gravel lease application on August 11, 2025. An updated gravel lease application was accepted on October 22, 2025.
Community Development staff has determined that the applicant meets the qualification requirements contained in VMC 4.08.040. Community Development staff has reviewed the application and has determined that the application contains the information required in VMC 4.08.050.
Natural resource extraction is permitted in the Heavy Industrial District with a conditional use permit. A conditional use permit for this property was approved on April 15, 2002, for gravel extraction: however, gravel extraction was restricted to the southern parcel (E 1). It is anticipated that Knik Construction will submit a conditional use permit application at a later date to allow extraction on the northern parcel also.
The Valdez Comprehensive Plan designates the place type for this property as Industrial Hub. The plan states that the Industrial Hub place type is characterized by land uses that generally have more impacts on the environment and surrounding land uses and may have the potential to affect the public health and safety due to sound, odors, and vibrations.
The applicant has requested a 20-year lease of the property for gravel extraction. Staff is recommending a 5-year lease. The City’s 2005 Property Management Policy and Procedures manual states, “Leases of City land should not be for greater than five years, unless it is in the public interest for the City to enter into a longer-term lease.” VMC 4.08.130 states, “The term of a lease shall depend upon the desirability of the proposed use, the amount of investment in improvements proposed and made, and the nature of the improvement proposed with respect to the time required to amortize the proposed investment.”
Recommended Lease Conditions
1. The City will have a volumetric survey done on the property to determine existing contours and quantity of stockpiled material prior to establishment of the lease agreement. The applicant will be responsible for reimbursing the City for the cost of the volumetric survey.
2. The City will have a land survey completed to more accurately describe the lease boundary on Parcel E 1. The applicant will be responsible for reimbursing the City for the cost of the land survey.
3. The Lessee shall be responsible for the restoration of the land and removal or reversion of improvements upon termination of lease, as required by VMC 4.08.260.
4. Gravel extraction shall be limited to Parcel E 1 unless a Conditional Use Permit is obtained for material resource extraction on Parcel C-1.
5. Uses on the property shall be limited to gravel extraction and to that which directly is in support of gravel extraction. Any storage of imported material or storage of equipment that is not actively being used in the gravel extraction is prohibited without a separate land lease.
6. The initial annual minimum payment of $3,000 with a charge of $0.60 per cubic yard for every cubic yard of gravel over 5,000 extracted each year. The rate of $0.60 per cubic yard of material was set by City Council resolution in 1992.
7. The lease shall not be effective until after public notice is provided pursuant to VMC 4.08.160.