That work is not being done to address the "non-potability" of the "potable" water. The work being done on Melgar is to alleviate the back-up of raw sewage that so very often spews into the air from the manhole covers on Melgar because the small-diameter pipes can no longer handle (and weren't designed to handle) the volume of sewage that the city produces. That work is now is now three months behind schedule and who knows when it will be finished. They are not doing anything to the rest of the city's water distribution system, just Av. Melgar.
The system is operated by the state government's agency CAPA. They, like all the others water agencies in Mexico, focus on supplying water to homes and businesses at low pressure, so that the individuals must wait until the nighttime water pressure is enough to push the water to a roof-top tank, and then use either gravity or a pressure vessel to run it through the owner's home pipes. CAPA is not mandated to provide potable water; just water. There are no cities in Mexico that I know of that have truly potable water suppled to homes or businesses by the government.
In Cozumel's case, semi-brackish water is pumped from deep wells in the center of the island from our (once) freshwater aquifer. Over-pumping has allowed saltwater intrusion to foul the aquifer and the wells. That brackish water is pumped to a tank where it is chlorinated before being pumped at low pressure throughout the city through a web of pipes that are buried in trenches carved out of the solid bedrock. Laid out in the same trench alongside the city's water pipes are crumbling sewer pipes made from asbestos and cement. These sewer pipes leak into the trench underground, and wherever there is a leak in the low pressure "potable" water pipes, the raw sewage in the trench can infiltrate the water pipe, contaminating the once-purified water. The water arriving at your house is a mix of once-purified water and raw sewage.
