I'm not 100% sure on this, but I believe that in the state of KY real estate transactions/loans must be closed by an attorney.

My thought was to use the next year to build good standing with the city while we can, and hope for the best in JulyThe property still pencils out for us if we have to do a long term rental on the other side, (ie very cheap mortgage for us in a great neighborhood) but there’s a lot more potential profit, obviously, if we get to run the STRAnd thanks for mentioning the WiFi, that never crossed my mind. 

The lot is just inside the border of an area recently up-zoned to Residential Small Lot (no minimum lot size, 1 DU per 2k sqft).

This is not an "arms length transaction". 

Both sell and buy side will be $1 million+ each transactions. 

Why not go to your title company and ask them to scrape a list of all cash sale transactions over the last year where the purchaser was an entity and where that entity bought multiple in one year.

What was the cross street on Locust that this was located?

Find out how he or she wants to book these types of transactions and then stay consistent with that method.

Is there a way to structure this transaction to not invalidate the exchange?

I work in the electrical construction field and we have to cross the private side of the sewer lines about 50% of the time for underground electrical service.