Ultimately, I feel like this is more of a "hey, it's free!" decision than a "we are going to use, and give back to the community" decision. Open Source is not a donation to City Government. They should give back to the community if they are going to have an explicit policy like this.
I think it's more of an explicit "just because it's free doesn't mean it sucks" policy. Most organizations need to learn that lesson and it's much quicker to have the head of the org communicate it than to wait for the IT people to convince everyone above them in the chain.