I'm no better at handling this stuff than you are; I need someone to occasionally give me the same advice. 

One day, I'll be a real BP REI and I'll let the real GCs handle the cajoling.  

When things go wrong in too many places at once I just over-saturate and can't handle it.

I can live without the cash flow from the property so I intend to throw the entire proceeds from the property into a separate account until I get a good handle on all of this.

This gentlemen still handles all of our issues in that city.Morel of this story is we almost lost a huge asset to our business over this but in the end we know it was the responsible thing to do. 

If I use flip proceeds to say buy a roof for the BRRRR or pay down debt would that reduce my tax bill on the flip proceeds?

Nothing too unexpected and my PMs in Lubbock did a top notch job handling.

Your only option is to offer tenant some money to leave, or reduce your purchase price by the amount you are losing (or ideally ask for a credit at closing).

I think he will know whats best as it is his deal and he knows the area and the numbers and it sounds like he has a good handle on all of it. 

If you follow these points you will greatly reduce your risk of major loss.