Sec 8 tenant; notice of non renewal or continue

[Ray King]

Have a long term section 8 tenant. Rent from the tenant and from the housing department is ALWAYS paid on time. Tenant is not the most desirable, as they are very hard on the property; beyond normal wear and tear. 
I need to decide which is the best course of business; renewing the lease with a significant rental  increase to budget/plan for future rehab, or give tenant a 60 day notice of non renewal, (April 1st.). Currently the rental amount is below average for the area. 
Kitchen and bath need a serious rehab.  Tenants children have grown and moved out the home, (over 18). Tenant has allowed his brother to move in without permission. 
The results of the rental increase, and the unreported change of household members is unknown until the housing department responds. 
I am truly at a loss. Having a vacancy with a rehab, and loss of rental income is stressful. The thought of finding new respectful tenants is desirable, yet costly. Please advise. Thank you.