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Proposed long‑term quarry lease draws conservation commitments and revenue forecasts; PUC to return with action
Summary
Staff outlined a phased lease with Oliver de Silva Inc. for SMP 30 and a potential future SMP 17 expansion that would delay Apperson Ridge mining, provide conservation funding and mitigation, and yield a projected $90–$141 million NPV to SFPUC depending on production scenarios.
Commissioners spent an extended portion of Tuesday’s meeting on a proposed multi‑decade lease with Oliver de Silva Inc. (ODS) to operate and expand quarrying on SFPUC lands in Sonoma Valley (SMP 30) and, potentially at a later date, Apperson Ridge (SMP 17).
Staff framed the deal as a three‑phase process. Mike Martin and Gary Dowd described staff’s retained discretion on environmental review and noted the initial lease phase would formalize a transfer of operating rights under the existing SMP 30 permit through 2021. A second phase would seek permit revisions to expand SMP 30’s footprint and deepen mining to 225 feet, add a slurry cutoff wall to protect creek flows, relocate utilities and update the reclamation plan so the site could be reclaimed as water storage. If those revisions are approved, the tenant agreed it would not commence mining at Apperson Ridge until either SMP 30 materials were exhausted or about 2030, whichever is later. A third phase would consider a revised SMP 17 permit and limited processing on Apperson Ridge tied to a conveyor system feeding processing at SMP 30.
Royalty and rent terms described by staff include a starting base rent of $500,000 escalating over time and royalty shares (15% of sales from the city’s SMP 30 site; 10.5% from SMP 17). Staff said the lease includes oversight provisions, annual mining plans, and mechanisms to adjust the lease if environmental review imposes mitigation.
Oliver de Silva and conservation partners presented a package of conservation commitments and mitigation measures that the Alameda Creek Alliance and the Center for Biological Diversity said were historic in scope. The conservation groups said the agreement would delay Apperson Ridge mining to reduce simultaneous impacts, remove processing infrastructure from the ridge by locating processing in the existing valley pit (reducing truck traffic), protect at least 600 acres in permanent habitat mitigation (3:1 ratio, higher for some species), contribute regionally to fish‑passage projects (up to $2 million cited), support a slurry wall around the pit, and pursue a federal habitat conservation plan that would cover listed species across the project footprints.
Jeff Miller of the Alameda Creek Alliance and Adam Keats of the Center for Biological Diversity characterized the negotiated mitigation, monitoring and funding commitments as more robust than what the groups expected from litigation or regulatory review, and praised the agreement as a precedent for combining operational and conservation outcomes.
Economic consultant Walter Kieser and Rebecca Venezini described revenue scenarios under varying production and price assumptions. On a 55‑year net present value basis, staff presented a range of approximately $90 million (low) to $141 million (high) to the SFPUC; annual revenues in stabilized years were shown in the staff model at roughly $3–6 million by year 10 under different production scenarios. Staff emphasized forecasts depend on production rate, prices and permitting outcomes.
Commissioners asked detailed questions about sequencing, water‑quality protections, the conveyor alignment and the mechanics of how mitigation and conservation funding would be triggered. Staff said they would return to the commission in two weeks with an action item and supporting documentation.
No formal lease action was taken on Tuesday; staff requested direction and said the item will be brought back after further review and completion of needed materials.
