SOUTH LAKE TAHOE, Calif. — A cannabis use permit may soon become available in South Lake Tahoe and a commercial building in the Al Tahoe area may be converted into tourist accommodations.

City staff is recommending that the planning commission on Thursday pass a motion to suspend a permit for Perfect Union SLT, LLC and recommend that city council pass an ordinance terminating the agreement because the company did not open a year after the permit was granted.

Three areas were identified where Perfect Union breached the agreement, two of which may have been fixed but it is still in breach according to city staff.

Perfect Union was to pay a Public Safety Impact Mitigation Fee of $21,250 within one year of the agreement date, which was on Feb. 13, 2021. The fee was paid on April 2.

The company was also required to show it had a “legal, possessory or other equitable interest in the property” as in a lease and said in a letter to the city on April 2 saying it has entered into an agreement with the property owner.

City Attorney Heather Stroud asked for a copy of the lease on April 6 but it has yet to be provided.

The city also believes there has been no construction work on the proposed site.

Perfect Union responded that it should have longer than 30 days to fix the issue because “the alleged breach is non-monetary and is of a nature that cannot reasonably (be) cured within a 30-day period.” However, the city said to trigger a longer cure period under Section 11.1 of the agreement, Perfect Union would have had to commence the cure within the 30-day period and have diligently prosecuted it thereafter.

“It is the city’s understanding that Perfect Union did not perform any construction work on the site during the 30-day period,” with the last inspection on the tenant improvements completed on Feb. 26.

While two of the three areas of breach may have been responded to, the company is still not open for business, which the city said is “sufficient to justify termination of the development agreement.”

The city was expecting to see tax revenue from the business, including a 6% benefit fee of gross receipts and to provide additional community benefits, such as educational and after-school programs for children to prevent cannabis use.

Should the planners suspend the permit and city council terminates it, that may open up the process for other applicants.

Planners will also decide whether to approve a permit and design review for a tourist accommodation project at 839 Tallac Avenue in the Al Tahoe neighborhood.

The application proposes turning an existing 3,300-square foot commercial building to four tourist accommodation units — hotel or motel residential design with kitchens.

The project will consist of converting an existing one-story brick building into four tourist accommodation units. The applicant proposes to add skylights on the existing pitched roof, adding new windows, and painting the current building mid-dark grey color. Staff says the proposed changes are consistent with the city design standards.

The city said it sent notices in the mail on April 30 to property owners within 300 feet of the property.