No, you've just chosen a bad metric.

The population of the town is not evenly distributed over the land area of the town.

A brief glance at a map indicates that pretty much the entire population of the town lives in a reasonably compact street grid between I-25 and the Rio Grande, while the municipal borders of the town include a vast area of empty desert to the north with near-zero development/infrastructure/population. Just as there aren't even roads there, there also aren't water pipes to maintain.

The US Census Demographic Data Map Viewer indicates that portion of town where anyone actually lives is around 1k people per square mile, and even that is probably understating the density of where the water pipes actually run, since the borders of those census tracts still include some big chunks of empty land.

That doesn't exactly make it a metropolis, but it is probably 5x+ the population density of the number you've come up with, and a much more reasonable density for having a municipal water system.

Edit: And beyond this, being somewhat of a tourist town, the need for services is substantially higher than raw population numbers would suggest. There's at least ~20 hotels/motels/RV parks within town limits.

The article notes: > "The city can attract more than 100,000 visitors during holiday weekends as people flock to the hot springs and the state's largest lake"

Those are obviously not all there at once, but the water system is clearly serving far more than the ~6k year round population, as well.