Council of Sanctuary! Council of the last bastion of freedom in the Underdark! Council of the people!
The purpose of this letter is simple: To highlight the less desirable aspects of your latest legislation as well as to suggest a different course of action.
Point 1) You mention almost all creatures and races on your list, but do not include Tieflings and Half-Orcs. Your perception is flawed if you think those are one step above - or below - of the other "monsters" you mention.
Point 2) Your decree does not mention who is authorized to kill those "creatures" on sight in the vicinity of Sanctuary. Can truly every citizen take his pitchfork, every beetle-farmer his scythe and begin to slaughter Grulpo or Gobbler? What chaos will this bring to town? What kind of slaughter has the council in mind?
Point 3) Who feeds the people of Lower? Who feeds the poor? The goblins in Lower do, despicable as they are. And yet- they offer their stew for an affordable price, preventing the starvation of a whole part of Sanctuary. Who will feed the poor once the goblins are killed or exiled?
Point 4) The Shadow Tribe may or may not be trusted. We can not know. But their dragon has repelled a whole Drow attack on Lower. Would you still make this decree if the Drow had broken through the Gates and if they had taken over Lower? No, you would not. Had they succeeded, they would have a warbase just metres beneath your warm and comfortable chairs, planning the demise and enslavement of the people in Upper, "monsters" and other creatures alike.
Point 5) A guest, if he applies for permanent guest status, can still be exiled by the council at will. So all guest will feel a blade pressed against their necks all the time. They are robbed of the freedom this place once promised to them.
Point 6) The goblins and kobolds in Lower have multiplied to great numbers. Is it safe to risk their wrath now that their numbers exceed those of about 33% of the ex-slaves? Would it not be better to find a peaceful solution, a solution that restores freedom to most?
What to do, council?
I propose this: go through with your plan. But make some amendments.
a) There shall be no killing on sight of the "monsters" that helped to defend and feed Lower, and conversely, Upper, for most workers and untrained slaves reside in Lower to do the hard manual labour in Upper. Instead, they shall be given time to establish a refuge away from Sanctuary, and once it has been established, they shall have the status of guests that are allowed to enter Sanctuary for trade or business.
b) If, however, they gain guest status, they shall be allowed in Sanctuary and shall walk the streets without fear, as long as they agree not to breed.
c) Include Tieflings and Half-Orcs on your list. They are no more or less violent and dangerous than the other races.
d) Make it so that the vote of one or two councillors is enough for a member of an exiled race to gain citizen or guest status. It would be outright impossible to gain the majority, given how prejudiced the current council is.
e) Once guest or citizen status is gained, it should only be made forfeit after a fair trial, not at the whim of a councilmember.
And remember what the origins of this place are: a camp of a few slaves. A haven for those who discarded the shackles of slavery. It has grown by the toils of those slaves, and not only human and elven slaves. I have read your history books and it seems you have forgotten your roots.
~ A concerned ex-citizen