City is trying to increase the density rather than expand the UGB.

The numbers include the current rent being increased by $75/mo (current rent is a little low).

This will happen because the depreciation expense decreases the owners’ basis in the property, which will increase their gain upon sale.

If you do refi and increase the loan amount, make sure the property will still cash flow well. 

I have a rental increase in the second year and offer an annual lease thereafter and it's never had been a problem.  

If I still lived there, my rent would have easily increased $1000.

Well, you INCREASE the risk by exposing yourself to having your loan being called due upon the transfer.

Definitely crossed my mind, however, surrounding neighborhood values are increasing.

I am not in a position to drive to out of state locations repeatedly to look at property, and if I had to hire a property manager it would drastically increase my costs on a 15 year loan.  

The price point is much lower, the rents are steadily increasing.