Amazingly, it is apparently nearly impossible to get decent comps for this so I'm not sure how to approach figuring out whether to outright sell it (and for what price), fix it up as a rental, or market it as a knockdown for the land. 

See if you can get a restraining order. 

It is just the IRS tax rules.Next up is I would get a good CPA and go over your plan.I think you aren't going to be able to meet your goals but being involved in the construction.

I'm trying to get a bed and breakfast and event space in Woodbury!

We know we could apply for a zoning change, but that process could/would take months and we are beyond ready to move onto our next investment.Has anyone else come across problems like this, where the lender is going down a rabbit hole and denying funds because of something that could possibly happen in the future?

The play is a 3 to 5 year hold, raise rents to get the valuation up to 600K and liquidate to 1031 into another investment.

You can still operate it within the LLC and get rental income on your personal tax return in a few ways. 

So, that you can get a fair idea of what value they provide before you jump in.  

As soon as you get an offer or 10 minutes before the buyer’s agent shows the property?

Depending on the program, pre payment penalty may get triggered if you make additional principal payments within the PPP time period.