Then wherever the water is getting discharged off of the roof, that what water is getting at least 4-5 foot away from the structure before it is left to drain with gravity away from the property. 

And I will state different jurisdictions have different rules, processes, expectations, etc.In my area you are required to have a permit to swap a water heater.

What if you turn on water and it goes everywhere.

If they can't do that, keep shopping.This may require digging up the foundation, sealing it from the outside, and installing a french drain to keep water away from the walls.

City water with one main at the street and how will they bill. 

One would think a tenant with an ounce of brains would change their habits with the first violation.You need to get rid of this tenant. 

As Landlords I'm curious to get your take on the below:-Which utilities (Electric, Water/Sewer, Trash, Internet) do you usually have your tenant pay in addition to base rent?

I used to live in the city and the taxes and water bills are nightmares.

The meters are read electronically with 3g and you get great reporting in their water scope platform.

Otherwise, you may need to replace a water service (13-15k), electrical service (10-15k) and upgrade wiring (This is a tough one, but maybe an additional 8-15k inside).