.. The town suggested, based on the path of the water
pipe, that the trench for the pipe was not filled well enough.

My thoughts also. A common problem is loose soil thrown into an excavation
that settles when it becomes wet. If that is the problem, poke the garden
hose into the settling soil (water turned on). This will consolidate the
soil as the water drains out. After it has settled, pack in more soil to
restore the surface level.