Editor’s note: This article has been changed to note that South Peninsula Hospital only encouraged its employees to speak out on Dr. Paul Raymond’s planned medical building.

The Homer Advisory Planning Commission last Wednesday approved a conditional use permit for a controversial 20,000-square-foot medical center to be built on Danview Avenue just north of the Homer Medical Clinic. The commission in a 6-0 yes vote granted the permit and made only minor amendments to the permit.

Landowner Dr. Paul Raymond proposes to build a two-story building that would house Kachemak Bay Medical Clinic on a 1.37-acre lot in what’s becoming a de-facto medical district. Zoned “Residential Office,” the Bartlett Street area north of Pioneer Avenue includes single-lot homes, senior housing, houses turned into offices, apartment complexes, South Peninsula Hospital, Christian Community Church and the Pratt Museum.

“I believe that there is no logical reason based on current planning and zoning criteria that the commission should go vote against the recommendations of the city planners and staff,” Raymond said at the meeting.

In his report on the permit application, City Planner Rick Abboud wrote that the application met the criteria for a permit.

At the Sept. 19 meeting, the planning commission also approved a conditional use permit for the museum to expand its front porch and gallery space. The museum closed earlier this month to remodel. With the permit approved, it will add the porch as part of current renovations, and the phase 2 gallery expansion as it raises more funds.

Raymond’s medical building ran into strong opposition from the hospital administration, with chief executive officer Joseph Woodin and other staff speaking and writing against the project. In an email, the hospital encouraged its employees to speak out on the project.

The planning commission held two public hearings, one at its Sept. 5 meeting and a continued hearing on Sept. 19. In a packed meeting at the Cowles Council Chambers in Homer City Hall last week, 28 people spoke, with eight supporting the project and 15 against it.

“A large, privately-owned medical clinic will create excessive capacity for providing health care in Homer, causing competition with publicly-owned SPH and the Homer Medical Clinic for patients and resources,” Woodin wrote in a letter opposing the permit. “… If we assume that Dr. Raymond will lease the proposed medical clinic to the physician group with which he practices, then the services likely provided will be outpatient surgical services.”

“At this point the hospital is very concerned about this project,” Woodin said in public testimony.

Raymond’s practice, Kachemak Bay Medical Clinic, is owned by MediCenter, a Kenai group that offers a wide variety of medical services, including family medicine, physical therapy, pain management, allergy testing, women’s health and gastroenterology.

Alaska Medical Group Management operates the Kenai Surgery Center of Kenai. Joseph Hurley, former president of the surgery center, denied that it had plans to operate a surgery center in Homer.

“Stuff is being said that is not true,” Hurley said at the planning commission meeting. “As of right now we have no intent to build a surgery center in Homer.”

Raymond also said he had no plans to lease part of his building for a surgery center.

“For the 87th time, no. This is frustrating to me,” he told the commission. “The only people talking about a surgery center is the hospital. I have told everybody this is impossible to do in this center.”

Raymond said he plans to move Kachemak Bay Medical Clinic into the new building. Currently, the clinic is in a building a block to the west of the Danview Avenue site. The clinic would be downstairs and the second floor would be closed in but left unfinished inside, possibly for a sleep clinic.

Lawrence Peek, Raymond’s architect, said the building wouldn’t fit design standards for a surgery center.

“What they’re saying I’m doing I can’t give them,” Peek said.

Carol Klamser, a nurse practitioner at Kachemak Bay Medical Clinic, said conditions there are crowded.

“My office space, I have a table in the kitchen,” she said. “Dr. (Ken) Hahn has a section in the nurse’s station.”

Klamser said there’s a misconception that the new building will be a new clinic.

“No, it’s Kachemak Bay Medical Clinic moving over one block,” she said.

Some of the criticism of the Raymond’s building came from residents in the area. Hohe Street and the neighborhood to the east have more homes and apartments.

In written and spoken testimony, Hohe Street resident Rob Lund said Raymond’s building would not fit into the Residential Office zoning.

“The proposed development … is hardly similar in ‘scale and character’ to any of the homes in the neighborhood,” he wrote.

In discussion of the conditional use permit, the planning commission grappled with that point. Commissioner Mandy Bernard asked Abboud if Raymond’s project fit the scale and character of the zoning district.

“That’s community judgment,” Abboud said. “That’s why we have a volunteer commission to evaluate.”

Bernard noted the commission has been reviewing the city’s comprehensive plan as part of a periodic update, and that one proposal is to create a medical district.

“We’ve identified it as a need to address, to figure out appropriate performance standards,” she said. “… We haven’t done that yet.”

Commissioner Dale Banks said people had raised some legitimate points regarding the scale of the building in the district.

“I think it can fit somewhat in a CUP (conditional use permit) in this district,” he said. “Even a hospital can fit into a CUP in a Residential Office district. I didn’t write the code. That’s how it is.”

Concerned that the upper floor might be unfinished on the exterior, Banks added an amendment requiring Raymond to finish the exterior shell, setting a 12-month time limit from when a building permit was issued. Noting that the commission had recently approved an 18-month time limit for another building, Planning Commission Chair Franco Venuti suggested the longer limit. The commission voted against the 12-month limit and approved an 18-month limit. Banks also pressed Raymond on building a road to the building. Abboud said the city can’t compel an applicant to do something off site, but it can suggest that. The commission approved an amendment made by Banks recommending that Raymond work with the city to share costs of a road improvement. A gravel driveway now provides access to the lot.

Speaking to the main motion to approve Raymond’s permit application, commissioner Roberta Highland acknowledged the criticism by hospital officials, but noted discussion had to focus on the provisions of city code.

“We really can’t look at the other information that was given us — the planning commission can look at it — but we can’t use that to make our decision on this building,” she said.

City Clerk Melissa Jacobsen said the commission still has to issue a decision and findings document to be signed by the chair. That could happen at its Oct. 3 meeting. Once that document is completed, a 30-day appeal period starts. South Peninsula Hospital and other affected neighbors could appeal the permit decision to a hearing officer or the Homer City Council acting as the Board of Adjustment. Decisions after that also can be appealed in Kenai Superior Court.

SPH spokesperson Derotha Ferraro said on Monday that the hospital was still discussing its options.

Reach Michael Armstrong at marmstrong@homernews.com.