Please note that changing the AC filter and cleaning the AC air intake closet should be done once every 30 days as part of routine maintenance.The Air filter on the AC had not been changed since you first moved in (Dec 2015) and the new replacement you bought was not the right size.

My thought is that I'll allow him to break the lease as long as I find a suitable tenant to replace him with and there is no loss of income. apparently he has someone who might be interested in taking over the lease. 

This reminded me of horror story I had when I was a renter and the property management company had little urgency in taking care of the issue.

HUD first does an intake interview (and they are backlogged about 2 months right now).  

Also each state has it own laws pertains to alcohol intake, consider your state laws, person size and body weight.. hope that helps, just an opinion.

There is an intake process, where she would be questioned about what happened and have to meet the requirements for showing that you denied her request for a reasonable accommodation.  

One last question, I see that a lot of people take a "hold deposit" then at move in take the rest, sign the lease and then give the keys but what if I want to require the renter to pay everything and sign the lease now and then give them the keys when they move in in August?

I see the value in taking the hit to qualify as a primary residence, and I think it is time within the next few months to finally make a move.It is a sellers market, but just combing through the MLS there are some glimmers of hope to find a good enough deal.

I think your main way to fight back is to switch providers, though that is more work replacing machines and contracts than I'm interested in taking on at this time.

Typically you want someone who makes at least 3x the rent in take home income.