I would do a cash-out refinance after the rehab to re-coop my monetary input for the remodel, and then sell the property.

If you do decide to sell, then strongly consider working with an real estate broker who has experience and a track record with multi-units to avoid numerous pitfalls.   

We both have strong local ties and care about the town and genuinely want to do what's best for the community, and self storage appears the only thing feasible for development on the property except warehouse space.

We have done a few projects in the area and know that sales prices are strong and DOM are low.

Only you can answer that.You would want to look for KEY INDICATORS of what they are doing today and in the IMMEDIATE past to see current trending patterns.If something happened way in the past ( some call it young and dumb incident ) and it was an isolated incident then risk might be lower.If tenant demand is super strong for the area then maybe you do not have to take on a tenant that leaves you questioning whether to rent to them or not.No legal advice given. 

I can tell you that Rock County, WI is as strong as any market I have seen.

With that being said if you can find a good deal turnkey or a fixer at a good price it seems like a strong market. 

My suggestion is to refinance into a blanket loan and pay some of the HELOC back- (I mentioned "some" because it sounds like you purchased property at retail pricing, therefore 25% or more will remain in the property, as 75% loan to value is most likely the max loan amount the lender will offer depending on how strong the cash flow and your credit).   

For me, a person who doesn't have a terribly strong grasp on finance, that's the simplest way that I can understand the difference between a good deal and a mediocre deal.

The penalty for not promptly responding, just for a couple of extra hundred dollars in proceeding to the next stage of default, far outweighs any small monetary gain.