This link leads me to believe that you need not worry in this incident; however, now that you know this dog bites, if an incident happens again you might be in trouble.
The “victim” also might be a scam artist, do keep that in mind. They might just be going for a quick settlement. Yet the “law enforcement” you mentioned seems to agree that changes need to be made to the property. This, with the knowledge that a biting dog is housed there (scienter), may make you responsible for future incidents.
I’d say you have three choices: evict the tenant, make the tenant get rid of the dog, or improve the fence. You should contact the “law enforcement” people you mentioned for more info as well. Tell them you want to comply.
