Before I get started on this, disclaimer, I'm an NU alum, former NU employee, and was an Evanston resident for 10 years not counting my 4 as a student.
To be clear on this, that's the relationship between the city council/government and the university. IME, most residents don't really care all that much (and a good number of them are tied in some way to the university, either as employees or alums). Obviously, those living really close like in the article below would be an exception to that.
History note: Northwestern has been there longer than Evanston (1851 vs 1855) and has that property tax exemption in its charter (that is, state law). The Evanston city council routinely uses that exemption as a red herring whenever they have problems balancing their budget and need to raise taxes (look over there! they're not paying taxes! it's their fault yours have to be raised, not that we can't control our spending!). This isn't a recent thing. I found a news record once of this same thing happening in the 1870s. That's right, the city has been using this excuse for at least 130 years. Northwestern also generally pays for the city services it uses (has own police, pays for fire service, pays for water/sewer, etc).
It's not just near campus that's nice. Most of the area between the L and the Lake is nice, as are scattered other areas like Central Street.
That party thing seems odd to me. Was a random home game (homecoming was a couple weeks later, family weekend was one week prior), was a loss, so the exuberance level should have been down some. I guess it was only 3 weeks into the year, so probably another week until midterms rolled around. If it'd just been near the game, etc, I'd happily blame the Purdue fans, but it sounds like it was the houses near Maple/Foster. That's been a weird spot for years. Split neighborhood, bunch of houses rented to students, the rest residents, those off campus spots tend to get more parties, since campus is pretty heavily regulated.
I'm a NU senior, and you're pretty much spot-on. Most residents (especially in the "student ghetto" between Ridge and Sheridan) understand this, they know that they're moving into a college neighborhood, and they recognize that if they lived near campus in a place like East Lansing or Madison things would be much, much rowdier. Northwestern employs more police than the city itself, and actually funds a "party car" operated by EPD to patrol the student areas on weekend nights. Things are changing, slowly, with university president Shapiro a lot more open to wet status for fraternities on campus because he recognizes that it's bad PR/neighborhood relations for drunk students to be causing a ruckus in the streets around campus.
This was in the news again this week, with Evanston threatening to begin enforcing a decades-long "brothel" ordinance (actually, had nothing to do with brothels ever, but NU took the moniker and ran with it) that prohibits more than 3 unrelated people from living together. See:
http://www.dailynorthwestern.com/upd...-law-1.2448459 Enough bad press made them back down, but the law remains on the books, and it's believed that the university agreed to think more about bringing social life back on campus when they talked to the city government about this.
I was referring to the "nicer" area as the part where students live, even though most of the houses and apartments that students rent are anything but nice...converted sun porches as bedrooms, people living illegally in basements, etc. There are certainly some families who have been there for a while and have really nice houses, but the whole area is kind of a zoo. Back to the topic of this thread, if the OP is looking to move to Evanston I'd recommend more "downtown" - the new condo buildings are pretty nice and not a bad deal with the weakened real estate market, and there's a lot less competition for housing once you get a bit further from campus because students aren't as willing to make the trek to their classes, so rents are way lower.
I agree with some of the other posts saying to look at other north shore communities like Wilmette, Winnetka, etc. Evanston is an easier commute to NMH, but the Metra is pretty good from points north as well.