ALBANY -- Tensions in small towns downstream from New York City's upstate Ashokan Reservoir have flared over water releases critics say are so muddy it makes a local creek look like chocolate milk.

The city has released water into Lower Esopus Creek when the reservoir is particularly clouded with silt to help protect its water supply that serves 9 million people. But many residents around the creek say the surges are killing fish, devaluing their property and ruining the creek. And plans being reviewed by state regulators to manage the releases have not eased concerns.

"It's eroded my backyard, I've lost trees, it's made the attractiveness of living on a pristine trout stream into looking at mud," said Bob Illjes, who lives on the creek in Hurley. "It's polluted the stream . . . bass, trout, perch and sunnies -- they aren't there anymore."

New York City officials who operate the vast upstate reservoir system said they are attempting to balance the drinking water needs of people downstate and the concerns of upstate watershed residents. They noted that a draft order being reviewed by the state commits the city to help with flood control, which is a particular concern in a region ravaged last year by Tropical Storm Irene.

"We're focused on trying to do things that are helpful to the community to the maximum extent possible," said Paul Rush, deputy commissioner of the city Department of Environmental Protection.

The water flow flap is the latest in a series of issues between the mostly tiny towns dotting the Catskill area and the city that created the water supply system generations ago. In recent decades, New York City has taken steps to avoid spending billions of dollars on a water filtration plant, striking a deal with local towns to limit development and purchasing tens of thousands of acres of land around the reservoirs.

Concerns started in 2010 after storms made the reservoir water especially turbid and the DEP made some releases into the Lower Esopus, which flows into the Hudson River. The state sought a $2.6 million fine against the city, but the sides have since reached tentative agreements aimed at solving the issue.

Under a draft consent order last month, the city would pay a civil penalty of up to $1.55 million, with $950,000 of that pledged to projects that would benefit the creek. The city also would commit $750,000 to projects to reduce turbidity on the Upper Esopus, which feeds the Ashokan, as part of a larger goal to reduce the use of alum to keep the water clear.

City officials also would have to be ready to capture seasonal runoffs in the reservoir to help with flood control.

Kate Hudson, director of the watershed program for Riverkeeper, said the consent order would not help the Lower Esopus because it will allow the releases to continue, or even increase. Saugerties town Supervisor Kelly Myers said the city is essentially using the creek winding through her town as a sewer.

"New York City has been enjoying the luxury of clean water, cheap water, for almost 100 years and it's really on the back of the local people," she said.

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