HUD will want you to first try and accommodate, but if you can show you can't find affordable insurance, you don't have to take the animal.This is a great document that explains service animal laws in CA:http://www.disabilityrightsca.org/pubs/548301.pdf

Working with tenants to accommodate their needs is customer service.

It sounds to me like your parents' landlord has been extremely accommodating over the years, much more so than most would be if an existing tenant moved in extra people and a pet without prior permission.  

He rents houses to them for their overflow students who can't be accommodated in their own properties.

"While there do not seem to be any cases dealing with the issue of multiple emotional support animals, the basic requirements for this reasonable accommodation would still be the same.

First step is to talk to them in a friendly manner and most people will accommodate concerns.

It accommodates a family with two kids to each have their own bedroom.

I personally will be more accommodating for their presence on a non-emergency repair but not to the point that I'm losing weekends and rearranging my personal schedule all the time for them.

Your upfront purchase price should accommodate odd factors such as layout so that you can re-sell at an attractive price relative to other homes in the area.  

Apparently, there is a big need for Section 8 in the community and not enough units to accommodate the need.