My initial thought is that the developers may have gotten a much better deal than they would have otherwise given the clear limitations on the land's use.

I am eager to start but can't get around the glaring issue of not having initial capital so I was wondering if there are any methods you guys would use to raise capital if you were in my shoes or is it just time to put my head down and put in long hours? 

And do they accept counter-bids after initial bid is placed?

The letters are pretty vague and when you look on the EPA website they talk about a 10-year initiative.

It actually went to auction initially on the 8th but no bidders except the starting bid which I believe was the bank.

Getting his/her initial reaction could open the door to an agreement that works for both of you.

Quote from @Jin Zhang: You initiate the process by filing a 3-day Notice.

I think initially it makes sense to find properties that already have finished basements, in-law suites, etc. as converting those spaces to ADUs will be inexpensive and create a significant amount of rental income ($2,000/month+ in most areas close to the city).

Real numbers- purchase 907k,rehab , closing costs, soft costs, 840k, all in 1.747 mil, basis for each unit should be roughly 291kappraisal of each unit minimum 400k , so 2.4 mil if for all 6.I might refi only 4 out of 6, that will cover initial loan amount.

Options like a unique amortization schedule or a 3/2/1 or 2/1 stepdown interest rate could provide initial relief to get you through the renovation phase while giving the seller confidence in a structured payoff plan.To determine an entry point, consider reducing the price based on the current NOI.