Someone can be a brilliant tax person but horrible to work with, and also vice versa. 

You want an investment that pays for itself, including mortgage, taxes, insurance, maintenance, and even some money set aside for a reserve to cover vacancies and capital expenditures.

In light of that did the developers wind up getting a pretty decent deal out of this after they took a big risk on a property with crazy restrictive zoning and no clear path forward prior to purchase?

Thats $7700 a year NOT including my accountant/Tax prep. 

Plus it makes bookkeeping and doing taxes etc. more complicated and annoying/ expensive.

The property was rented and generated $160 cash flow after mortgage, taxes, insurance and property management fees were paid.

What were the prior tenants during this time using it for?

That's 50k a year gone and you are losing tax write-offs and equity potential.

Britt,My firm has evaluated some smaller properties (under $500k) in the past for cost segregation, and it generally does not cost justify moving forward, since the benefits are small, and typically the tax liability on the income is minimal if any.

As more people placed more properties in STR inventory, and as more municipalities taxed and regulated the industry, the profitability of the overall industry has reverted to a much more aligned (lower) risk adjusted return.