What is a good idea now could be a BAD idea later (i.e. what if AirBNB is restricted by ordinance where you are and you can no longer rent that way.) 

These cities are much more likely to enforce bans or heavy restrictions on STR in the near future.

However, there is city water and I should probably see if there would be any restrictions on that.

Are there any deed use restrictions? 

Lending restrictions became VERY (ridiculously) tight in 06 and beyond and have not loosened to pre-06 levels.

Given the rules the restrictions of those areas I suppose I can see why they would do that ,but if it was me I would let the tenant know Elvis has officially left the building and a new sheriff is in town !

If all things being equal, I think Peninsula could be a better bet with less rental restrictions.

Is there any restriction in using the FHA loan to purchase a duplex that I would live in when I already have a conventional mortgage on another property that is not my primary residence anymore? 

Figure your cost on a 1031 for relinquish (selling) is around $500-750 and on the replacement (purchase) is maybe $250 or so and a lot of paperwork, timelines and restrictions, if it is 10k and you have held it more than a year so it is long-term capital gains instead of short-term capital gains, then it is maybe saving a few hundred bucks...not worth it. 

Posting on Airbnb works too but restrict to only > 30 day rentals.