So, the government is providing a solution to something to which there is no problem.  

What is the best criminal/credit/eviction solution that I can use to check people’s background?

As someone mentioned likely hotel lobby far too strong politically), Palm Springs, La Quinta (not Palm Desert - Marriott too strong & outlawed them / and not Cathedral City - they just put a moratorium on STR permits late July 2019), and Joshua Tree. 

Quote from @Robin Simon: This is still a very tricky area for lenders as there are not many "industry-standard" tried and true rules - many DSCR Lenders and buyers of these loans are still wary of the SRO model - that being said, it is a lot easier and more flexible to underwrite on an acquisition if you are buying and the property could be utilized as a LTR / MTR or STR as that allows for a more tailored projection (as long as the property doesn't have unique or altered characteristics that would require it to be a SRO / MTR)Great question. so what's the solution especially if it's primary ?

Expected life of the trees remaining and replacement cost.

I have been approached by a number of companies who provide housing solutions for individuals with special needs and think it could be a fulfilling partnership, but want to make sure I am mitigating risk and protecting myself. 

Or if it blew a tree over on the house/fence/AC unit it adds up pretty quickly.

I'm kinda getting the sense this is the better solution as well.

We have a nice, large lot (7500sf, level, no trees) in a prominent NR3 zoned location in Seattle, currently serving as a grandfathered duplex.

Going to be very hard, potential solution would be to bundle up at least 5 of these low value properties into one portfolio "blanket" loan