Rich, I'm not so concerned with your participation since you are a big boy, you have access to a good attorney and you've been there done that, so my thoughts might be geared more toward other readers.
First was the guarantee that the property can not be encumbered over the note term. Strickly speaking, this can't be done on any development, liens may arise by the operation of law. Secondly, a note and deed of trust on land can only encumber a property to the value or amounts extended by the lender. While an owner may in other agreements agree not to encumber the property such would not operate as an event of default under the security agreement but it would be a breach of that agreement. It's an issue of equity by an owner.
A syndication or partnership may limit losses between investors by agreement, but to say losses can't happen and that the pricipal might be unable to pay under the agreement is entirely another matter.
You can have losses and, depending on how it is structured, partners can not only lose money but become liable.
Next, a lender is a lender, not a partner in equity. Lending money and taking a security interest and then taking an equity position means you are wearing two hats, by acting in matters of the business, like restricting other borrowing, approving plans or specs or other matters can lead to claims of management participation or restricting operations. In the event of default, the cause of the default, in whole or in part, can be placed on you, with liability for damages. It's why banks don't follow this arrangement as they did in the old days.
To obtain profits, you need to participate in the partnership, active or passively, and loan the money to that entity, not as an outside lender. The entity can places the lien on the property and the partners secured by agreement in that entity.
IMO, there is no such thing as guaranteed profits. Obviously if your uninsured partner/principal drops dead, profits would be in question, so will the repament of the debts. You can insure against this.
A partner/principal can be bonded against other risks, non-performance for any reason, like disability, criminal acts, bankruptcy, or just bad management, that may be expensive and not worth the arrangement, so you would have risks.
IMO, knowing very successful builders and developers, about the only way to guarantee any promise is by pledging assets, other assets to attach in the event things don't work, and at a value sufficient to cover the obligation after the collateral is secured and sold. It sounds like the individual offering this deal may have good intentions, but is probably unable to cover any such guarantees to this extent. If he could, he wouldn't be asking for money.
Another issue, what kind of development is it and the exit strategy that will happen within 12 months? Where does the take-out come from?
Another point to a comment as to taking collateral as an upside to a loan by a lender, that is a misconception and has been discussed here, concerning the sale of collateral by a lender. Don't try to learn lending from a guru book.
Now, the good;
Rich would probably be in a good position to partner in this since he has development experience and if necessary could step in at any point to completion, even if the developer died and was insured or other events occurred on the down side.
The numbers offered are fine, the guarantees made with good intentions are fine, just needs fine tuning. Needs structural adjustments. The way to ensure that no other loans would be used is through the agreements/by-laws/operating agreements of the entity in title.
Other investors could join based on knowing who the other investors were, thier abilities and level of sophistication, might be fine and a good deal. I'd assume the deal would be shared by the % of participation. There are risks.
Not a bad basic offer conceptually, if it were local to me I'd consider participation if modified, not as a lender taking profits working both sides of the fence though. :)