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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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19 Comments
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Easy solution. You just have to think like the City of SLO. Create high-paying city jobs for employees of the “non-profit” behind the project. Wouldn’t be the first time. What happen to SLO’s six rental housing inspectors when the program was terminated? That’s right.


16

If you want to donate property for a park or such, first put it in a conservation easement with the stipulation that the Bureau of Land Management be the conservator. No state or local government entity can touch it ever again after that….


32

Good news! Stop these greedy developers who build ugly eye sores under the guise of affordable housing. I’m so tired of the disgusting croney capitalism of the central coast. Don’t let locals build homes but let nasty developers pillage our community. We want deflation and a housing crash here in all honesty! That news article just came out that says our California dollar is worth less than any other state. $100 is worth $87 in California because we let this crap keep going


78

In this case, crony socialism.


10

The city of SLO is just following the in the footsteps of Grover Beach. They did the same thing for the property on S 13th, original owners left it for a park, Grover Beach drugged their feet for years/decades in building the park and finally turned the property into housing in direct opposition to the what the original owners required for the property.


60

It’s a county wide problem. A sickness in the minds of those who get a little dough and a title. They will bend you over and build the ugliest thing imaginable. Everybody here wants their crap to 10x on value every year and it’s not sustainable. Grover should be a cheap working class town instead it’s a mix of bogus “mixed use” development and they’re trying to turn it into redondo beach. It really is a sickness in the California mind to be so greedy and so careless with community and history and what made this place special to begin with.


47

The city needs to give up this fight. They’re going to lose and they’re wasting our tax dollars on this. The city is being deceitful, knowing full well that this housing project was not the wishes of the owners of this property. The city is so hellbent on building housing, they are willing to manipulate, lie, and cheat to get what they want. I’m disappointed in how city leadership has become so unethical.


100

How much in Federal or State Homekey funds has the City used or granted on this purported project?


Is the City using state or federal dollars to defend this lawsuit and pay adamski morosky madden Cumberland and Green for defense of the city and Smart Share housing?


Seems like a waste of state, local and federal dollars


38

Anything to prevent affordable housing :/ I blame the city, just as much as the reporter tattle-tale-ing on the non profit… In the end the only ones who really end up losing are the people that need affordable housing. Shame on everyone involved.


-48

What an obtuse remark! Reporter’s doing exactly what reporters do! Slimey politicians are doing exactly what slimey politicians do. And sheep-like credulously cretins like you are tying themselves in knots trying to justify your brand of politician- like they always do.


24

Are the expensive homes recently built being sold? Yes? THAT’S affordable housing.


You want ghetto’s and the massive crime ridden “project housing” of New York, all run by the government….and we can clearly see how shamefully lousy that has been for “the people that need affordable housing”.


Moving on up to the East side, ain’t all it’s cracked up to be.


8

The end doesn’t justify the means!


6

Good work Saro Rizzo, Smart Share Housing Solutions’ Waterman Village is not what Mary Gail Black wished or imagined.


107

Another failure by Christine Dietrick, guess her compensation of almost $426,000 in 2024 just wasn’t enough to get quailty, maybe if the city bumped her into $500,000 she would actually be good at her job, she is probably already in the club, and she’d realize the city is wrong to try and steal this property for usage other than what the city agreed too years ago


79

Dietrick and her staff just sit there, or somewhere, and collect their salaries. All real legal work is contracted out to private firms.


13

She is likely up for another raise.


4

This ain’t an issue on which honorable parties can disagree: slimey little city leadership just decided that upholding their end of the deal no longer fits current desires, and is trying to pull a fast one. Wonder how many tax dollars they’ll waste trying to make this pig fly?…


96
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