They usually have regulations on the # of dwellings per acre and I’d hate for you to spend money designing bringing utilities to the site only to be in a city council meeting where the local neighbors shut down the proposed development. 

It's human nature (unfortunately).

The house is paid off, and I'm trying to see what my best option is to do with it.I would like to do a full gut renovation on all 3 apartments, but I would like to be able to see if it's possible to convert the cellar to be a legal apartment and get a CO that states "multi-dwelling" instead of "2-family".Does anyone have any experience with this?

It has two separate dwellings on one lot.

If you're someone that brings value to to the table, it should be a no brainer for loyalty given you're working with a decent human.  

We could potentially subdivide the lot into four lots and build a main house, a Junior Accessory Dwelling Unit (JADU), and an Accessory Dwelling Unit (ADU) on each lot.

It's human psychology.We live in a day and age where new & better quickly replace old and expensive: like Uber replaced taxi.

@Edith AcevedoYour struggle with logic will be eternal; we are humans get used to it.     

How about change that to 'most humans' and pretend you are GOD.

Accessory Dwelling Unit (ADU) that we lease to a long-term tenant on a month-to-month basis for $2,850 per month (inclusive of all utilities), and a 300 sqft.