In 1889, the railroad pushed northward another 4 miles to Pottersville, New Jersey. This section, built as the Rockaway Valley Extension Railroad, required that $70,000 in stock be sold. Black River Falls, an early tourist attraction, was located a short distance from the depot in Pottersville. Fortunately for the railroad, the first 8 miles to Pottersville was almost entirely flat and posed no significant engineering challenges. The next extension, from Pottersville north to Peapack, New Jersey, however, would be different. This section would feature an "L"-shaped climb up a 2%-3.5% grade, with a 4% drop on the other side of the hill, and a , wooden trestle, the only significant structure on the mainline of the railroad. Starting late in 1889, and then after the Spring thaw in 1890, work on the Rockaway Valley Peapack Extension Railroad was performed. The railroad would bypass the Lackawanna's Peapack station by nearly a half a mile (roughly 1 km). It's not entirely clear why Melick chose to avoid Peapack, but more than likely cost was the reason, as this section was funded for only $70,000, and any significant deviation in route in an easterly direction towards Peapack would have required much more funding from stockholders.