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That was discussed as one model. I suspect the city is not "against" such a model, but doesn't want to tie the success of the rollout to private providers. Fort Collins already got burned by Axia backing out of talks about a contracted model.

Once you assume the city is both building the fiber and providing services over the fiber, I'm not sure if also making it an OAN makes sense anymore?

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It would allow the city to earn additional revenue by leasing the lines to other ISPs. There are a lot of situations the city can be in where they would make less money overall by offering the whole service than they would by just charging for the infrastructure. In many cases the customer support and technical support staff would be government employees with the extra costs that involves, a private company can often provide this service more efficiently.

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