You hopefully have some idea of the internal politics about the request -- whether this is something that a majority of the directors strongly wants to do, whether they are just curious, or whether they are leaning towards the idea but could be swayed. Take advantage of that in your response! Be respectful of their intentions, and don't go out of your way to antagonize either supporters or opponents of the idea, but you can either influence the decision or at least register your concerns.
If you are opposed to the idea (would you ask Slashdot otherwise?), point out the technical and legal considerations in carrying it out. Explain the extent of technical methods to prevent tech-savvy young students from using VPNs and other proxies to access the blocked sites. If this means you need to upgrade your network infrastructure with newer or beefier routers, put a dollar figure on that. Find polls of how consumers view this kind of network filtering, with bonus points if the polls focus on or break out your renters' demographic group, and point out the risk to revenue. If you don't know the regulatory risks and potential tort claims in detail, outline them at a high level and recommend that the company retain legal counsel to advise on those things.
Because you're the IT guy, they probably view you as a subject matter expert, and you can use that authority to guide their thinking. Just keep in mind the audience for your report, and respond in a way that shows respect for both their level(s) of technical background and their business objectives.