The city government is upgrading the water-works to improve water quality.

water-works 是由 water（水）和 works（工程、设施）组成的复合名词，指"供水系统"或"自来水厂"。works 在这里指"工程设施"，water-works 合起来表示"处理、供应自来水的整套设施"。