N.Y. Village Law § 11-1120
The board of water commissioners may sell to a corporation, individual or water district outside the village the right to make connections with the mains or reservoirs of such village for the purpose of drawing water therefrom and fix the prices and conditions therefor. The board of water commissioners of any village may contract with the state of New York or with the state authority having control and supervision of any state institution to furnish water to such state or state institution either within or without the corporate limits of said village upon such conditions and conferring such powers in the state or such state authority and for such compensation as said board of water commissioners and the state of New York or such state authority may agree. If the mains are or shall be laid in or through another municipal corporation not having a public system of water works, the board of water commissioners may itself lay additional pipes for the purpose of distributing water from such mains, and shall have the same rights in the streets or highways of such other municipal corporation as if the principal system were established therein. The board shall not sell nor permit the use of water under this section if thereby the supply for the village or its inhabitants will be insufficient.
N.Y. Village Law § 11-1120