We used to do pet deposits, but now we collect a one-time "pet fee" upfront that is designated for damage repair and cleaning on the back end. 

Anyway, repairing flood damage is not a big deal.

I like your attention to water and moisture - its one of the leading causes for property damage.  

The roof rafters are falling due to water damage.

Perhaps, your PMC needs a better lease or an addendum to cover issues like this.PMC should send a warning letter that clearly outlines repurcussions of what will happen if the tenant doens't comply.YOU must be prepared for the tenant not paying, requiring eviction and any potential retaliation damage to the property.

He lives a standard young professional life, so no damage or issues have come up in the past 3 years that could break any lease terms. 

They have a part time need for a dressing area for weddings.

(biggerpockets.com)When assets are damaged: How a cost seg study helps if an asset gets damaged!

I have a tenant whose condo suffered a major roof leak, which caused internal dry wall and related damage.

But option A seems dangerous to property as it seems shifts the ground damaging the foundation and building as mentioned like below>>Designed to prevent the ground from shifting.From the nearest wall of the building this retention wall is at about 15 feet away.At one point i thought of putting some gravel for better water passage but dropped that idea as it cost money and becomes more harder to maintain by tenant or me in futurePlease advise