The problem was someone filed a complaint. Like any bureaucracy, once you put something down on paper they have to do something. If she hadn't been such a difficult person to get along with she'd still be living there.
The article states that, but it is semi-official policy to let these units be. I think that if you made some random complaint about your neighbor's mother-in-law unit, you would likely not get any action from the city. Therefore the complaint must have been fairly serious (or the developer pulled some strings).