A controversial plan to allow the development of a new St. Vincent's Hospital on the edge of Greenwich Village has been given the green light. NY1's Ty Milburn filed the following report.

The building is smaller than what they wanted, but officials at St. Vincent's Hospital finally got the news they've been waiting for on Tuesday -- the city's Landmarks Preservation Commission said yes to a new state of the art, $800 million hospital.

"I think it represents to New York as a whole that healthcare needs to enter the 21st century," said St. Vincent's Hospital President Henry Amorosso.

Plans call for the hospital to be built directly across the street from its current site on 12th Street and 7th Avenue, on the grounds of the historic O'Toole building which will be demolished to make room for the new hospital.

The project has long been opposed by preservationist who complained it was too big. To win approval, developers cut the height of the proposed building from 328 feet to 278.

"It has been a significant reduction and I think you heard from the commissioner's today that reduction played an important role in terms of their assessment of the appropriateness," said Bob Tierney Chairman, New York City Landmarks Commission.

The project will remain up in the air unless the developers can get Board approval for a 350-unit apartment building that will sit right across the street from the new hospital. Developers plan to use part of the money they raise from the apartments and apply that to construction costs of the new hospital.

The developers are betting a better a economy will help them sell the apartments before they are built.

"Hopefully the economic situation we are in will have alleviated itself. And the economic stimulus would have kicked in and we'll see positive things happening in the economy and we think four to five years from now. We'll be able to have a very viable project," said Developer William Rudin.

Preservationists left the meeting frustrated, saying they believe the board acted too hastily in giving the hospital the green light.

"We want to make sure the measure we fought for so hard to protect the character of our neighborhood are kept intact even as Saint Vincent's is allowed to develop the facilities it needs," said Andrew Berman, Greenwich Village Society For Historic Preservation.

The project has several other major hurdles to clear. Up next, developers will present revised plans for the apartment building --calling for preserving more of what's already there while hoping to win board approval this spring.