The reply to said letter/notice is to ASK for "reasonable accommodation in light of disability under the Fair Housing Act."  

This is especially true if you need a loan extension or other accommodation sometime in the future.Commissioned mortgage brokers make money with volume and the web is perfect for that.

I would just make the accommodation she is requesting and won't renew her lease.

So I am most probably going the conventional way but I am only putting down 10% and they are will to accommodate me on that.

So, yes I've been very accommodating :)@Terrell Garren thank you for the advice!

The WLA has a Seattle specific lease agreement to accommodate these specific rules. 

If your wife is accommodating that is probably the best you can ask for at this time and may be the best you could ever hope for.  

If the neighborhood could accommodate a 5th unit and it truly adds to the property for aesthetics as well as utility (i.e. is there a place to park, nearest city utility access, septic system capacity, etc) it would certainly warrant investigating the potential the ROI for building a unit.  

I have decided that I can not conceded any further to accommodate the tenant.

Solidify your growth plan for your business and make sure the tool you choose can accommodate scalability as needed.