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PLANS TO OPEN A CONTROVERSIAL NEW COFFEE SHOP AND DELI AT LOVERS POINT HAVE BEEN APPROVED.    THE APPROVAL CAME AFTER A PUBLIC HEARING WAS HELD IN PACIFIC GROVE FRIDAY EVENING.  AT THE HEARING SOME SMALL BUSINESS OPERATORS EXPRESSED CONCERNS OVER THE FATE OF EXISITING BUSINESSES WITH ADDED COMPETION.  RESIDENTS ALSO WORRY ABOUT INCREASED TRAFFIC TO THE AREA.   THE DECISION CAN BE APPEALED TO THE PLANNING COMMISSION BEFORE THE NEXT SESSION IN OCTOBER.