Dwelling (Building coverage)The limit should be based on the Replacement Cost of the building (cost to rebuild withthe same kind and quality excluding the foundation)2.

I was considering rebuilding and using the home as a luxury vacation rental with an emphasis on hosting events such as weddings.

The price tag is steep, but if you are already willing to do the rebuild spring to have the water damage affected areas removed , treated and dried out by a remediation specialist. 

With 3 income streams per house (up/down/garage) most bring in right around $36,000 annually in rent so I would likely have to press to get additional funds as rebuilding in 8 months would be fairly tight (especially this time of year).

No time to rebuild. 

I am currently not buying but mostly because I had bought a lot in the previous 2 years so I'm not in the rebuilding liquid capital phase.

Usually cheaper to rebuild it while it's still up.

That coverage is designed to cover the additional costs if you are required to rebuild to current code after a covered loss.

Another question is, will the insurance company allow you to insure it to ACV or actual cash value or are you required to insure it as RCV replacement cost value - if so you must insure it for the insurance companies cost to rebuild the property new, which could be much different than what you would like to have it insured for?

You might end up in a very good position if they expand the rebuilding of the city.