However, the building is still functioning in L's business.

Business operations includes: Reviewing monthly/quarterly/annual financials The asset manager (it could be you, we discuss below) will prepare the financials for each member to review based on the member operating agreementHow member votes function for improvements, management, and expenses, etc.

They need to protect that tax base for cities to function.

Biggerpockets search function - Use the search function to see if a BP colleague requested a CPA in your area.

Having the ability to help family is one of the 'perks' of becoming a functional expert in this field.  

@Jonathan White Seems to me that unless the defective septic was disclosed in the listing (as you said, it wasn't), you had every reason to think that the property was being delivered with a properly functioning system.  

I hadn't thought about having multiple heirs "dilute the pot" and create a potential headache in the future - I'll certainly have to think about it.I think cash flow is the primary function of this property, but then again, I don't know much about commercial real estate.

@Christopher Cadenhead You should use the search function on the forums.

The current water heater is well over 10 yr old and while still mostly functional it will need to be replaced soon.

You are right, the veil of asset protection could be easily pierced, but that is more a function of how your LLC is set up.