I guess my main concern with approaching the market is due to our current political situation - facing the very real possibility of "land expropriation without compensation"... 

Never invest in any location with rent control.Inflation compensating - Every time you go to the store, the same basket of goods costs more and more dollars.

If you improve the occupancy and improve the property condition, that is the work done by you and thus, you should be compensated, not the current owner. 

How are you going to compensate his works ? 

Unless the property is in an urban renewal or urban redevelopment district, you will not be compensated for any repairs or improvements you make if there is a redemption.

You must compensate them for it.

You have to do the right thing and offer some sort of compensation.

The utility company IS offering me a considerable compensation ($10K); however I am concerned about signing and thus relieving all control of the land. 

Otherwise it does not matter the amount of work they put in they will not be compensated.

Option 2 is to get all the origination fees rolled into the loan itself, this can eliminate all origination fees but those fees will be absorbed into your rate and the rate goes up to compensate.