People want to live where the amenities are, and all other things being equal more population can support more diverse sets of amenities. E.g. you need enough gay people in a town to support a regularly open gay bar, and generally speaking people want to have a choice of bars for going out.
The worst part of this is that the town has the money in the bank to build the water and sewage system. There's upwards of $8 million earmarked for the project. However, each homeowner is going to be responsible for $30k in hookup costs, and the town will have to shell out $500,000 per year to operate the new water system. Since it's a low income area, the >50% property tax increase needed to run the system won't fly, and neither will the hook-up costs. Instead, all the new builds are focused in rural areas where there is no infrastructure needed or in the larger towns / cities where costs are significantly higher but deemed to be an acceptable risk by developers.