I'm about to renew a lease and I'm going with discounted rent with a tenant who is chronically late.

The chronic bad tenants know how to play the system, and when they see that you have your defenses up they will move on to an easier sucker. 

A recent editorial in the Star Tribune written by Owen Duckworth of the Alliance for Metropolitan Stability regarding evictions in MN ended his piece by writing, "And to cure chronic housing inequity, we need systemic changes that put power and ownership in the hands of tenants, not private landlords." 

You don't settle with someone who has an open case against you unless they agree to close it. 90 days to let a chronic non-paying tenant stay is excessive unless the tenant were making up all the back rent, which he is not.

And I would set certain criteria that would make it very clear whenever a tenant has "earned" the right for treatment like that, to a certain extent...I would not tolerate it from a renter that is chronically late or doesn't take care of my property though.

The policy I have covers accidents and illnesses: $100 annual deductible, 90% reimbursement, no cap, chronic conditions covered, routine items that aren't accident/illness not covered.

Sign of the times; the tenant must have spent hours/days/weeks writing this book/synopsis  I mean grievance letter including all the references to law; my first thought is at least one adult in the household is chronically unemployed?

This is important to me, as my whole life up until that point I have been a chronic underachiever, squandering my natural aptitude.

It has worked out for me for the most part.I've also worked with people who are chronically late paying rent.  

Recent sales (last 6 months) is the data you need to determine value.Here there are some neighborhoods that are chronically over valued on the tax assessment.