This implies residential units can be built at lower costs than ADU additions and provide better return. 11) adding an ADU to SFH can make the SFH fall under rent control.

If you’re still concerned, you could consider installing programmable thermostats or low-flow fixtures to help control costs without relying entirely on tenant behavior. 

Where are the HVAC controls and do both units have the ability to access it?

You will get the greatest returns and have more control. 

He may get stuck with rent control laws that prevent him from catching up later. 

Offer the design team a piece of the equity OR pay a premium as incentive to keep to an established timeline (that is within their control). 

Also make sure you understand everything about adding an ADU including value of the ADYPU, financing, impact from rent control, duration between initial expense and initial income, true cash flow (know the 50% rule, at 50% rent ratio initial property tax will be near 20% of income)- educate.  

@Jeremy Bloom  the rag on the thermostat can be beat by placing a remote thermostat that is set to the legally required temperature with that remote thermostat actually controlling the temperature.

Mixed-use continuation is best served if you have foot traffic there or if there may be local business who could use a storefront and there aren't a ton of other similar mixed-use options near by.If I was choosing, I like mixed-use better because it gives you a diversified investment inside of one investment.

Do you feel this is controllable or that it's mostly up to chance who succeeds and who fails?