New York City is a tough place to build, and no areas are more challenging to developers than the city’s historic neighborhoods, as the experience of the Rudin Organization and St. Vincent’s Hospital Manhattan has just proved again. The developer and the hospital will have to come up with a new plan to build a new hospital and market-rate residential units after the city’s Landmarks Preservation Commission turned down the team’s $1.6 billion redevelopment proposal in Greenwich Village. Objections from community groups over the project’s scale helped scuttle the proposal for a 329-foot-tall, 625,000-square-foot hospital building and 400 units of market rate housing that would include a 253-foot-tall tower. If the commission’s decision stands, it could make large-scale development in Greenwich Village more difficult for other major institutions in the area. New York University, for example, wants to build 3.5 million square feet of new space in Greenwich Village as part of its 25-year, 6 million-square-foot master plan. The hospital wants to build the new, sustainable facility on the site of the O’Toole Building, a 45-year-old building in the medical center complex. A new hospital would consolidate functions from several existing hospital buildings that the Rudin Organization would then demolish and replace with the residential component. St. Vincent’s insists that the new project is essential in order to effectively serve Greenwich Village’s burgeoning population and work force. But community activists persuaded landmarks commissioners that the St. Vincent’s project would change the character of Greenwich Village. “It would set a very, very troubling precedent in terms of institutional development in our neighborhood,” Andrew Berman, executive director of the Greenwich Village Society for Historic Preservation, told CPN this morning. In particular, Berman’s group and others criticized the scale of the buildings, arguing that they would have dwarfed the rest of the neighborhood. In comments during a public hearing last week, landmarks commissioners said that four of the eight buildings slated for demolition, including the O’Toole Building, have historic value and should not be torn down. The entire project should be also scaled back and redesigned to be more in keeping with the neighborhood, the commissioners said. But the hospital portion of the project still has a chance to go forward as planned. St. Vincent’s will appeal the commission’s decision as a rare hardship case, arguing that it can only fulfill its mission if it builds the new project.