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It's not a bad idea it's been used repeatedly on earth, its just the incentives never lined up to make district heating and cooling a thing everywhere. Sweden and old Soviet cities use district heating since it's really cheap at scale. Dubai uses district cooling (with electric chillers though) to cool pretty much the whole city for far cheaper than every building having its own rooftop system.
In North America we take the most insane approach of every home having its own miniature thermal plant (furnace) and electric air conditioner. District heating and cooling is a hard sell because trenching in new insulated pipes would be extremely disruptive and expensive compared to if they were already in the ground prior to this. If you could somehow convince everyone to be ok with the disruption and also to have 80% or more of the city hook into the system as subscribers, it would be vastly cheaper than natural gas heat or electrical cooling.
Parts of Ontario use great lake water for cooling, so district cooling is a thing in parts of Canada.
There still are district systems in north America though they just tend to be university campuses, where all of the buildings and dorms are cooled or heated with one central combined heat and power plant.
One of the biggest benefits of district cooling is elimination of one of the biggest drivers of the urban heat island effect: AC exhaust. Every working AC unit makes every other AC unit near it work harder. A district cooling system pipes everything back to one plant where that heat is rejected out the top of a stack.
Thermodynamically it shouldn't just reduce AC's contribution to the heat island effect, it should also make buildings themselves into heat sinks helping to cool the city itself as thermal energy tries to migrate into buildings where the district system soaks them up and pipes it away to the cooling plant.