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My sister is a civil engineer in PA and is familiar with this situation. She told me that basically these municipalities did not take care of their pipes, refused to raise any money for them, then, when they got old enough that the situation became critical, sold it off. Now this company comes along, has to make required fixes to the pipes, and has to raise the money to do so. The private company gets to be the bad guy, while the local governments, who neglected the pipes for a decade or more, don't get heat.
All this said, if they weren't allowed to sell it to a private company, there would be no "get out of jail free" card and maybe they would have pushed harder to take care of them damn pipes.
Point is, I don't think it's quite as simple as it looks on the surface.
So it's bog-standard "let-it-break-and-then-sell-it-for-a-song" neolib shitfuckery.
It's the same tactic for the NHS in the UK, the one remaining publicly-owned service the Tories can't get away with selling off, so they're letting it slowly die.