Pro rata is the best but it’s definitely not the fairest and it causes the tenants to be upset, for good reason. 

With  one property, a hotel that doubled as a homeless shelter one neighborhood over shut down and has caused problems for the surrounding areas.

It is not real insurance, it doesn't cover things not caused by guests, and can't be depended on. 

And must be pretty significant unreported income if it would have caused $45k in state tax liability.You advised your client to wait past the expiration of state statute.

Is there any legal action one can take or is it just a lost cause?

Of course, if I was a bad boy, just let me know what I got up to that caused the issue.

And that something caused your intent to change. 

She's also likely to be causing your tenant in the lower unit to have a higher heating bill.

It's usually best to talk with your neighbors about your plans and get their support as one of the variance tests is that the requested relief does not cause a public health issue or alter the essential character of the neighborhood.Try googling "tests for a variance in [your state]" and talk with your local zoning department.

The Real Estate Crash of 2008-2010 caused real estate prices to crash across the country - but didn't affect rent amounts.