(a) The council of any municipal corporation operating a system of waterworks or sewer or gas or electric plants belonging to and owned by any town or city may lease, or may contract for the operation of, the system of waterworks or sewer or gas or electric plants for such period of time and upon such terms and conditions as the council may deem for the best interest of the town or city.
(b) The lessees, or parties with which the town or city has contracted, shall be required to maintain, keep in repair, and return the plant to the town or city in as good condition as when received, ordinary wear and tear excepted, but the maintenance contemplated shall permit more modern or suitable machinery or equipment, equally as efficient to perform the service required, to be installed in place of machinery or equipment then in use.
(c) No lease shall be made, and no contract for the operation of any such system shall be entered into, except with persons, firms, or corporations, both for profit and nonprofit, holding a franchise to operate a system of waterworks or sewer or gas or electric plants in the city or town in which the plant or system to be leased or operated is situated.
(d) No plant shall be taken over for operation under the provisions of this subchapter unless and until the lessee, or the party with which the town or city contracts, has filed with the town or city an approved bond, in such sum as the council may require, for the faithful fulfillment of the terms of the lease or contract.