The IP has been "dead" for 8 years, other than a couple of references or playable characters in other games. They've generated $0.00 from it in that time, and there's been no indication of renewed interest... except by former players. Players who are so keen to get back into the game that they throw money at the HC team so quickly that the monthly donation goal is reached in minutes.
But the potential revenue is actually secondary, because it's small potatoes. "Free" money, but probably not enough to pique their interest. The primary consideration is what it would cost to issue C&D orders, file infringement suits, pursue legal action, etc. Lawyers are expensive, corporate lawyers more so, and courts have fees. Realistically, they face the possibility of spending hundreds of thousands of dollars to "protect" an IP they all but buried years ago.
Yes, they could spend the money to shut down every publicized server and keep the "City of" brand locked in their basement filing cabinet, but unless they're planning to resuscitate the brand or launch a sequel, it'd be flushing money down the toilet, and considering that the server code is now publicly available, ineffective. Alternatively, they can work with the players, come to an arrangement and collect revenue from that.
And that's the financially responsible response. Accept a small, regular income from a "dead" IP, rather than hemorrhage money trying to shut down every server.