The hospital owns all but three properties on the west side of North Seventh Street, according to Salzmann.
"That's why we drew it to the alley," he said of the health-care services zone.
The proposal prompted objections from Sixth Street-area residents about the encroachment of the hospital into the neighborhood. The plan presented Tuesday would create the institutional zone to include both North Seventh and North Sixth streets, Salzmann said.
Salzmann said the institutional zone requested by the hospital would allow such uses as professional offices, outpatient clinics and nursing and rehabilitation centers. The number of permitted uses, however, is a dozen, compared to 26 in the health-care services zone.
While the institutional zone includes a larger area, it excludes some uses that were of particular concern to residents, according to Salzmann. The hospital, for example, could not build an actual hospital in the area, an ambulance or rescue service, or a helicopter pad.
"We came up with the institutional zone, but it's really a buffer zone," Sixth Street resident Carl Miller said Wednesday in a phone interview. He said he and some other residents came to the conclusion it would be better to reach a compromise with the hospital rather than fight the rezoning.
He said he and other residents met with hospital officials on four or five occasions to come up with the plan.
Miller said one unique feature of the institutional zone would be a 60-degree lineal setback from the property lines. That means additional floors on any new building would have to have less square footage than the floor below it, up to a maximum height of 40 feet.
"It forces them to keep the buildings lower," Miller said. Buildings along Sixth Street also would be limited to 35 feet of frontage, require facades to be at least 60 percent brick or brick veneer and prohibit any new entrances along the street.
Miller said those restrictions will help maintain the residential quality of Sixth Street.
The planning and zoning work session on the hospital rezoning plan will be held Oct. 27.
In June, the borough's zoning hearing board approved a variance and several special exceptions for the hospital, which were required for a $40 million expansion that includes a new emergency room, an addition to the cancer treatment center, a new patient care building and more parking.
Located in a residential zone, the hospital is a nonconforming use, according to the borough's zoning ordinance. Under current zoning, the hospital requires zoning hearing board approval for some projects on its property.