The Passaic Valley Water Commission received the go-ahead to build two massive water tanks at the historic Stanley M. Levine Reservoir, but engineers must design the project so that it restores water to the Upper Raceway, one of the key features of the Paterson-Great Falls National Historical Park located nearby.

The state Department of Environmental Protection informed the water commission earlier this month that it can move forward with construction of the tanks, but the newly designed reservoir must also provide water to the Upper Raceway, the 19th Century canal system that delivered water to Paterson's mills just below the Great Falls.

The DEP's approval, while expected, is nonetheless a significant step forward for the Levine tank project, which has been bogged down in a battle with historic preservationists. Construction of the two, 2.5 million-gallon tanks, estimated to cost $26 million, was supposed to begin in 2015, but is now four years behind schedule.

In addition, Ray Bukowski, the DEP's assistant commissioner for Natural and Historic Resources, instructed the water commission to complete a study on the raceway by September 2019, and put $2 million in an escrow account. The funds are to be used for rehabilitation of the raceway or as a match for grant applications, Bukowski said.

"PVWC will make every effort to design and construct the necessary project elements in a manner that will minimize, to the extent possible, the requirement for removal or alteration of historic fabric from the historic district or historic raceway system," Bukowski wrote in a letter to the water commission.

The Levine project is Phase I of the water commission's $135 million plan to drain its three open-air reservoirs on Garret Mountain and replace them with tanks. The others, New Street and Great Notch, are located down the road in Woodland Park.

The federal government long ago ordered the water commission to either cover or re-treat the water it stores in open-air reservoirs to better protect against fecal contamination left by birds, wildlife and runoff. The deadline to meet the mandate was 2009, but nearly 10 years later, construction has yet to begin and the project remains mired in a bureaucratic tug-of-war between historic preservationists and clean water advocates.

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The water commission met Thursday for the first time since Bukowski's letter tying the raceway to the Levine project. After meeting in closed session, several commissioners expressed support for tying the projects together, but were hesitant about the $2 million in escrow funds.

"We're looking for something that is ironclad," said Idita Rodriguez, who chairs the commission. "We want to know if the $2 million can change. Could it wind up costing us more?"

Another commissioner, Rigo Sanchez, was put off by the escrow fund. "It's a squeeze," he said. "They're squeezing us."

The commission decided to table the matter until its meeting next month.

Joseph A. Bella, executive director of the water commission, said reviving the raceway was possible from an engineering standpoint.

"It's doable," he said, adding that a retention pond would have to be built at Levine during tank construction to hold the water. "But you would have to keep the water moving. You can't have stagnant water."

Located on Grand Street, the Levine reservoir dates to 1885 and was once a critical piece of the infrastructure in Paterson, America's first planned industrial center. The raceway system is even older, dating to the early 1800s, when the first textile mills appeared, to be followed by locomotive works and dye houses.

Opponents of the Levine tanks fear not only the disruption of a historic site, but the impact it will have on water rates. The public has been largely shut out of the planning process, critics say.

"I think the people who pay the water bills should have some say in what the mitigation is going to look like," said Bob Guarasci, the executive director of the New Jersey Community Development Corp., an anti-poverty agency located in the historic district. "They may or may not be in line with the community's priorities."

Construction at Levine will likely start sometime in 2019. But before that can occur, the water commission has to hire an architectural historian to document the Levine site, and it has to install three interpretive signs on the property explaining the history. And the tanks, once they are built, must be camouflaged with natural vegetation, according to the DEP.