A Town-Gown Clash Over the Costs of Public Services Brendan Bannon for The New York Times Alfred State College, in Alfred, N.Y., in August. Alfred University is nearby. The dispute over paying for public services mirrors disagreements nationwide. ALFRED, N.Y. - It was just about the time they were going to turn off the water that this village recognized it might have a college problem. The remoteness of Alfred, N.Y., is part of its appeal to students. For years, residents have lived in symbiosis alongside two schools: the private Alfred University and Alfred State College, a part of the State University of New York system. The schools capitalize on Alfred's small-town charms - the single stoplight, the deer wandering in the street - while the village enjoys thousands of students eating, drinking and spending at local establishments, an annual rush of revenue and revelry that arrives as autumn does. But cleaning up after those students is less appealing, and made all the more difficult because the colleges, as nonprofit, tax-exempt entities, are under no legal requirement to pay anything for public services. A former tile-manufacturing town in western New York, Alfred has a shockingly skinny tax base: a whopping 90 percent of its assessed value is estimated to be tax-exempt. So last year, to try to cover its costs, the village told the schools they would have to pay more for their water. SUNY balked. And that is when the village made a quiet but firm ultimatum: Pay up or go thirsty. "It got their attention," said Virginia Rasmussen, a Village Board member. And we got the check. With increased financial pressures on municipalities across the country, as well as on places of higher learning, town-versus-gown squabbles over Pilot payments - an acronym for payments in lieu of taxes - are increasingly common and often contentious. In July, Gov. Lincoln Chafee of Rhode Island signed a bill requiring Bryant University to negotiate a payment for services with its hometown, Smithfield. Pilot fights have also gotten testy in Pittsburgh - where the city and the University of Pittsburgh Medical Center have sued each other over the center's tax-exempt status - and in Princeton, N.J., where the approval of a $300 million arts center for Princeton University was dogged by questions over how much the Ivy League institution should pay into local coffers. Such disputes usually involve major institutions and the cities that host them. It is rarer for a battle to break out in a tiny spot like Alfred, despite financial strains that can be acute. "It is a perennial problem in these communities," said Peter Baynes, the executive director of the New York Conference of Mayors, which has argued - unsuccessfully - for changes in state law to allow local governments to require payments from tax-exempt entities. And certainly while they wouldn't want to trade those schools, there is this fiscal recognition that while 100 percent to the community is receiving the service, only a fraction of the community is paying. Tax-free policies have also been in the spotlight in New York. In June, Gov. Andrew M. Cuomo signed a new law allowing SUNY branches and some private colleges to offer tax-free zones for new businesses that open on or adjacent to their campuses. While officials in villages like Alfred and other upstate college towns like the idea of more jobs, the idea of more tax-free property is less appealing. "You're taking more stuff off the table," said Justin Grigg, the mayor of Alfred and a professor at Alfred University. And it's a pretty small table already. And it is not just in his town, he added. "This is not just an Alfred problem," Mayor Grigg said. This is a statewide problem. He mentioned Mr. Cuomo's plan in a letter sent to Alfred State and Alfred University in June, asking each to voluntarily pay $75,000 this year for public services, saying "we are concerned about tax-free campuses being wrapped by tax-free businesses." But the governor's office says localities do not need to worry about losing income under the new law because businesses that open on property adjacent to tax-free schools will not be automatically taken off the local tax rolls, although their employees will be exempt from state taxes. In many ways, Alfred is much more college than village. The full-time, taxpaying resident population is only about 1,000, many of whom work at or make a living through business from the colleges. During the academic year, some 6,000 students descend on the village, studying on the hillside campuses and playing in the village's clutch of bars, restaurants and requisite pizza place.