San Luis Obispo loses first round in court battle over Canet Adobe

December 8, 2025

By KAREN VELIE

The City of San Luis Obispo lost the latest round in a legal battle over the proposed construction of a low-cost housing development on a property donated for park and recreational services.

More than 30 years after Mary Gail Black donated the Rosa Butron de Canet Adobe to the city for use as a park or recreational facility, the city struck a deal with a nonprofit seeking to create low-cost housing on the site. Smart Share Housing Solutions plans to place 20 tiny homes, ranging in size from 220 to 264 square feet, at the 466 Dana Street property to serve low and very low income people.

On April 3, attorney Saro Rizzo filed a suit that asks that the city’s approval of the project be set aside because the city lacked the authority to approve the low-cost housing project on the property.

City administrators then filed a demurrer to have the lawsuit thrown out because it is based on a “misreading of the grant deed.” San Luis Obispo Superior Court Judge Donald G. Umhofer did not agree.

In the 1920s, Black and Mildred Waterman moved into the Canet Adobe. The couple lived together in the adobe until Waterman passed away in 1969.

In 1988, Black offered to bequeath the property to the City of San Luis Obispo with multiple strings attached. In addition to maintaining the property for parks and recreational services, Black required the city to fix the roof, perform biweekly gardening and tree trimming services, pay the taxes, pay the utilities, pay for insurance and allow her to live undisturbed at the property until her death.

She also required the park’s name to include Waterman in honor of her former partner.

On Oct. 4, 1988, the SLO City Council unanimously voted to adopt a resolution that restricted use of the property for park or recreational purposes. Rizzo says the resolution serves as a contract.

“Whereas, the City of San Luis Obispo is desirous of accepting this grant of real property and premises for park or recreational purposes,” according to the 1988 resolution. “The city agrees to conditions of the grant deed.”

As part of their attempt to have the case thrown out, the city’s attorneys argued the language in the deed was merely a request.

However, the deed includes a clause: “In the event of failure to comply” the property reverts to Black’s heirs. “Language thus suggests something more was intended in the grant than a mere request,” according to the judges rejection of the city’s demurrer.

The lawsuit asks that the city’s approval of the project be set aside because the city lacked the authority to approve the low-cost housing project on the property, which was supposed to be “for the benefit of the general public for park or recreational purposes.”

The city argues that the language of the deed is not evidence of a dedication. On the other side, Rizzo alleged the unsigned deed was Black’s offer and the 1988 resolution was the city’s acceptance.

“The demurrer is overruled,” according to the ruling. “The court finds the petition sufficiently alleges a dedication of the property with a restrictive covenant.”

Meanwhile, Smart Share Housing Solutions is asking people to donate to Waterman Village, while not disclosing the ongoing litigation.

“The Waterman Village project will provide San Luis Obispo with new community spaces, the preservation of a historic adobe, and much needed affordable housing. Smart Share is preparing to submit construction documents for a building permit,” according to a request for donations. “The next hurdle to clear will be funding. For more information, visit our website to find out how you can help.”

However, California laws require a nonprofit to disclose information to prevent misrepresentation, deception, or misunderstanding during fundraising, which generally means disclosing ongoing litigation related to the project. California Government Code § 12599.6 requires transparency so that donors can make informed decisions about their contributions.

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