if you have to demo it all, way easier to have it done vs spending time or money and less surprises.very different project then 20 yr old cosmetic flips and may require a lot more permitting and upgrades since it's all open the building dept may want you to meet current code as much as possible.

That being said, there are also more financial risks and permitting is notoriously tricky.

Then I sent emails directly to Clayton Morris inquiring about a finish date and he responded by voice-male that permits were almost completed and that it should be 4 to 6 weeks and it would be "smooth sailing" as he characterized it.The house was never built, I've paid back-property taxes and fines of over Approx $1200...ongoing yard maintenance costs of anywhere from $40+ up to as much a $225 monthly for a vacant lot just to keep the city off my back with fines...etc..Bottom line is.....After having a nearly perfect credit score and credit record of 25+ years, I will be in Bankruptcy court in May, 2019 because I cannot afford the payback of the credit card funding because there is no house built (cash flow) and there is not a single attorney that I contacted who doesn't want $60,000 (up-Front) because they all say they can't do it on contingency because Clayton has so may law-suits against him already that they feel there will be little (if any) money left after all the litigants already in line have been paid.

What does the permitting process look like and getting the zoning changed? 

Permitting.

Oakland permit department is telling me Category 1 ADUs require separate addresses, and therefore, separate metering.

The non-buildable tract of 15 acres was being sold to a farmer for crops, not houses and they were not permitted because no building rights were remaining. 

Assuming you "converted" the property to rental 4-5 years ago and you filed for rental applications/permits and have been filing 1040's for that property then you should be good from an age perspective. 

All the same permits and inspections should be required whether the home owner does the work or not.

The city doesn't count it though because of how it was permitted.