Running like that all the time seems unconscionable, but it makes a lot of sense as a backup while the primary is down for repair, as a very cheap-to-install but wasteful-to-run system that would be appropriate for short durations only.
I think they might've been running a Freon loop with the condenser in tap water, to achieve higher thermal delta and just skip the enormous radiators and fans.
They're generally on top of the building, and they kinda look like generic air conditioning units. https://www.munters.com/en/munters/products/coolers--humidif...
Whether or not that's wasteful really depends on where exactly it's happening. If the city water is being pumped out of a fossil aquifer, that's obviously a problem. If the water is coming out of a reservoir with abundant supply, the water being "used" is merely taking a slight detour from what it would otherwise do ("river→reservoir→hvac→river→ocean" rather than "river→ocean".) There could be some energy losses in the pumping and processing of the water, depending on where it's happening, but that's not the water itself being wasted.
My grandparents had a system that worked basically on that principle. Since they lived in a farming town it used irrigation water which was much cheaper than tap water.
The problem with fresh water isn’t the overall supply of fresh water. It’s getting it to communities that need it, when they need it, and distributing it without contaminating it.
It's not nearly as bad as watering a lawn, where water goes out clean and comes back as contaminated runoff that has to be captured and treated or dumped.