"A handle that can be attached to piping and used to shut something on and off."
The Valve Handle is meant to be placed on the pipe in the bathroom. This allows the toilet to be flushed which reveals the M19 Handgun. It reappear in Resident Evil 7: Biohazard as one of important item to "solve" Lucas' puzzle.
The Valve Handle is located in the basement on a gurney. In Resident Evil 7: Biohazard, it is located at the Party Room at the Testing Area which requires to unlock the combination lock first.