Now they are paying $2,866/month in principal and interest. 

Hence, I plan to pay the HELOC off as aggressively as I can.Thanks in advance for any insights you can share!

A rep from historical zoning  felt the most knowledgeable and thinks short-term rentals are not allowed and that the only thing that is technically allowed is a bed and breakfast where the owner or their agent would have to be on site.

I was originally planning to put all my monthly returns to pay down the HELOC as quickly as possible so that I can get into the next property but am worried about how to deal with paying the taxes if I don't allocate any of the returns to the side.

Go to a construction site (production home builders--- Toll Brothers, Orleans, KHov) and find the carpet installer.

At one point she even said if the hotel doesn't provide kitchen then I need to pay her $500 just for food for 6 nights.If you were the landlord, what would you do? 

Compare each IRA Custodian's fee schedule and go from there, figure out how much you are willing to pay for them to service your IRA. 

When its family and you have time to pay it back or its gifted its okay.

So my question is, How Should I go about financing a new build with a construction loan, But still pay myself for the work I do?

I said there was no reason to sell the property (as rent would easily pay the mortgages, taxes, and insurance).