The requirement is that the house meet habitability standards, and building code standards say a house must be pest free to be habitable.

I would start with the code & zoning department for your community

That is a health code violation.

My question would be becoming a qualified assisted living operator and the certifications / licensing per your state (For me Texas) to get your property up to code?

I think there are two maybe 3 ways to look at this in my mind.  1) you go into it and bring it all up to modern standards but using that old charm to basically take what is there bring it up to modern standards and rent it out essentially I'm thinking cocktail bar or something trendy like that.2) most banks are on really good centrally located real estate if this is true, then I'd consider it for the dirt, plan to scrape the lot and go vertical with whatever the highest and best use is.3) a kind of combo of the two, if the lot is in a good location and its doable, pull the vaults or other "character pieces" out of the building, scrape the lot, and build whatever is best suited for the site there, but incorporate those historical pieces into the final designs.Is the site near a major retail area? 

They said that per California Revenue and Taxation code, they're asking me to provide them info such as the purchase agreement, rent rolls, etc. to assist them in doing the reappraisal of my property.  

If you need a referral code or more information let me know. 

My friend said his client nearly bailed when she found unexpected wiring issues behind the kitchen walls..apparantly the seller hadn’t touched that electrical since the Reagan era..but with a patient electrician who understood the local code and a carpenter who improvised a shelving trick in the diningrom, they ended up selling above asking.Flipping and building can get tricky, especially once you start thinking bigger.

I could also argue that building costs and building codes change over time.

Consider having a lock that can be easily rekeyed or a pin code enabled lock such that you can easily change things, especially after a drama filled hissy fit where one tenant suddenly leaves out of anger/frustration.8.