Additionally, the color approval (and everything else, it seems) is scrutinized and decided by an "environmental control committee" and not the design committee.  

If there was environmental found the banks that owns the note would likely opt for a short sale so they are not in the ownership chain of title.So see who the lender is on this property for a copy of the report.

And Rehab Costs would be the cost to tear down and construct the new property, including all hard and soft costs that aren't factored into the Fixed Costs.For example, if I have a house that I can tear down and rebuild a 2000 sf property that would sell for $400K; it would cost $100/sf to tear down and rebuild; I'd have $50K in Fixed Costs; and I'd want a 20% profit on the resale price ($80K), my max purchase price for the tear down would be:MPP = $400K - $50K - $80K - $200K = $70KKeep in mind that the rehab costs must account for all of the following:- Site Planning- Zoning Approvals- Utility Installation- Permits/Impact Fees- Environmental Studies- Etc...If these costs aren't factored into the per-square-foot construction costs, you need to factor them in separately. 

For instance, an environmental issue or one that burnt down.2) The county does not care what the property is or looks like.

Make sure there's no environmental issues. 

All great advice so far, we'll try not to repeat any of it:1) Not all banks will lend on small multi-family or out of their local footprint.

They have a nice footprint in the area, and they are very responsive. 

The IRS is going to see that as you buying from yourself unless you own  50% or less of one of those LLCs.You can use any intermediary as long as they have a national footprint.  1031 is a federal statute so it's form is the same nationwide. 

If not, I think I would at least do that and put the trust in the environmental experts.

Minus the few trees that would need to be cut down and minor grading for outward footprint.