One factor not mentioned in the post is the nationalization of the house-building industry.  The NY Times had a Magazine story about the subject a few months back, so the full text is behind the dollar wall.  The significance of nationalization is that the profits from projects in sprawl-friendly areas can be used to pay the "costs of doing business" for projects like the one described above.   Back in the days of small, regional house builders, it would be much more difficult to come up with $22 million to pay off the city.  

Is it wrong for municipals to charge such developers fees?

I think developer's should pay such fees.  Where I think the deal went wrong was the town's insistence that density not exceed 4.3 units per acre, the City's standard for development.  This is for seniors, seniors don't do enjoy working big lawns.  The density could have been much higher, at least 16.  Further, they should have made some commericial development near the border for medical, groceries, restaurants, etc.  The developer is quoted saying that they wanted higher density.

In my experience it is not the developers who are causing these low densities and resisting mixed use, it is city planners.