Hello Laura. I would recommend that you have the water on and available during the inspection so that the inspector can test the plumbing. I would also recommend that you find out from the city what the inspection entails. I know that the city pays for their own inspection to be done to ensure that the property meets their standards, but I would not want to assume that the city inspector will cover everything that a privately retained inspector would cover.
I am not clear on whether you are buying a bank owned property or whether the property you are buying is just vacant and the water was turned off. If it's bank owned, then the bank's agent will have to get the property de-winterized and then have it winterized again after the inspection and the bank may have you, the buyer pay for that. That's just how it works when you purchase a bank-owned property. If the property is privately owned, the seller should pay for the water and electricity to be turned on so that the inspector can conduct a meaningful inspection. I hope this helps.