I think it is best that you do an immediate termination. In my 8 yrs of daycare I have only termed one child so I do not take termination lightly. This child's constant physical and emotional misbehaviour needs to be addressed by her parents whom IMO have no parenting style and seem to have passed on that role to you. Collecting urine samples is not our job and I would be embarrassed to ask anyone to do that for me, as a parent!
As for them being neighbors, who cares? These people seems the sort you smile and wave to and continue on and that is what I would do after the term. Good luck